Preamble

The House met at half-past Two o'clock

PRAYERS

[Mr. SPEAKER in the Chair]

Oral Answers to Questions — EDUCATION AND SCIENCE

Schoolteachers (Unemployment)

Sir A. Meyer: asked the Secretary of State for Education and Science whether, in view of unemployment among schoolteachers, he will make provision for optional early retirement on a reduced pension.

The Secretary of State for Education and Science (Mr. Frederick Mulley): I am considering what measures may be possible.

Sir A. Meyer: Will the right hon. Gentleman import some sense of urgency into his considerations? Is he aware of the demoralisation among potential schoolteachers who train for this exacting job and who now find themselves without any possibility of employment? Would not such provision open up some possibilities of recruitment of new entrants to the profession?

Mr. Mulley: The Working Party on Teachers' Superannuation is about to consider some proposals put forward by teachers. It may be better to deal with this matter by way of compensation regulations. The hon. Gentleman should not put the teacher employment position out of perspective. Naturally, we do not want anyone to be unemployed, least of all teachers, but less than ¾ per cent. of the teaching profession is unemployed. The increase this year as against last year, when there were chronic shortages, is less than ¼ per cent. We should not get the matter out of perspective.

Sir G. Sinclair: As the right hon. Gentleman is considering superannuation

schemes and compensation, will he carefully consider the position of heads of schools who, through no fault of their own, may have run out of steam and who need to seek other employment? The maintained sector should part honourably and generously with them to allow a more dynamic leadership to take over.

Mr. Mulley: I am sure that great interest will be taken in the hon. Gentleman's question. Whether the heads concerned would agree with him is a matter for argument. This is essentially a matter for the local authorities, because they employ the teachers. I shall put the point to them. Any arrangements have to be tripartite, among the teachers' organisations, the local authorities and myself.

Mr. Freud: As the Secretary of State has said that teacher unemployment might rise to 10,000 in the next year, what discussions has he had with local education authorities to dissuade them from taking the easy way out and not fulfilling their teacher quotas, which would be an immensely damaging and short-term solution?

Mr. Mulley: I have not given any figure for the expectations of teacher unemployment, because, with all the uncertainties about wastage and so on, I do not know whether anyone can give a precise figure at this stage. I spoke last summer to the local education authoritie—I did not wait until now—and asked them to fulfil their quotas. I told them that they should give priority to young teachers leaving college as opposed to those who had formerly been teachers and who had left the profession and who now, because conditions had improved, wanted to re-enter it. It is for the local education authorities to determine whom they employ, not me.

Sussex University

Mr. Gow: asked the Secretary of State for Education and Science whether he has any plans to visit Sussex University.

Mr. Mulley: I have no plans to visit the university at present.

Mr. Gow: Following the banning of the meeting which was to be addressed by the hon. Member for Antrim, South


(Mr. Molyneaux) on 25th November at the university, will the Secretary of State take this opportunity to confirm that he and his Department will seek to preserve the crucial principle of free speech at our universities?

Mr. Mulley: I regard it as deplorable that free speech should be limited, whether on university campuses or elsewhere, by threats of violence.

Mr. Flannery: Will my right hon. Friend agree that although we wish to defend free speech, when events take place such as those that occurred at the meeting of National Council for Civil Liberties in Manchester recently, they are bound to create deep feelings, especially when there is violence as a result of actions by organisations such as the National Front, and that that is bound to make people worry even if they want to defend free speech?

Mr. Mulley: I accept what my hon. Friend has said. I am not familiar with the details of the meeting in Manchester to which he has referred Those in authority sometimes have to determine difficult issues, for instance, whether there is a risk of public disorder and injury, or a possibility that they may be condemned for taking decisions which may appear to be against free speech. The police and other authorities have some difficult decisions to make.

Dr. Boyson: Is the Minister aware that this is the second time that this has happened at Sussex University? Two years ago, the lecture of a distinguished Harvard academic, Professor Huntington, was disrupted. The authorities were forewarned by telephone, but they ignored the warning and did nothing afterwards. Could the University Grants Committee be given a hint at some time that the provision of public funds to higher education institutions that cannot guarantee the continuance of free speech and tolerance is an affront to British taxpayers?

Mr. Mulley: I think that on more mature reflection the hon. Gentleman will realise that this is not a matter that can be dealt with merely by a reference to the University Grants Committee. One small consolation that we might have, since the other incident occurred two years ago, is that at least it is bipartisan

as regards political complexion of the Government of the day.

School Transport

Mr. Beith: asked the Secretary of State for Education and Science what recent representations he has received from rural community councils and other bodies representative of rural areas on the proposals of the Working Party on School Transport.

Mr. Mulley: The hon. Member presumably has in mind the consultative document of which copies were placed in the Library in October. I have received 16 representations from bodies in rural areas, and I will take them into account in considering the future of school transport.

Mr. Beith: Will the Secretary of State take particular note of the deep opposition among parents in rural areas who live more than two or three miles from the schools that their children attend to the idea of having to pay a charge? Will he recognise that in many cases these children are travelling long distances to school not by any choice, but because of the closure of village primary schools and the consequences of the reorganisation of secondary education?

Mr. Mulley: I am aware of the problems. It is precisely because of the difficulty of balance that I thought it right not to take any steps until I had had full consultations with the local authorities, which are likely to take some considerable time. It may well be that we shall not find a solution which will be acceptable to everyone.

Dr. Edmund Marshall: How soon does my right hon. Friend expect to be in a position to bring to the House fresh proposals for legislation on this subject?

Mr. Mulley: Until the consultations are concluded—local authorities rightly have a key part to play in this—I am not at all sure that there will be a basis upon which legislation can proceed. However, I stress to my hon. Friend and to other hon. Members that if they so wish local authorities may make transport arrangements for any distance. They are not limited to the three and two miles to which the hon. Member for Berwick-upon-Tweed (Mr. Beith) referred.

Mr. St. John-Stevas: How can the Secretary of State justify the assertion in his consultative document that a flat-rate charge of 7p would be sufficient to secure equality of treatment for all those schoolchildren who need transport at no extra cost to public funds? Surely on the Department's own figures, which have been given in a number of Written Answers, the charge would probably be nearer 14p than 7p, and that would need a contribution from each parent of £1·40 a week for each child.

Mr. Mulley: The figure of 7p was the figure that was worked out on the best information that we had as to the likely number of people affected. Obviously, it will need updating since the time the consultation document was prepared, because, unhappily, bus fares are rising in different parts of the country and at different dates. If the hon. Gentleman is interested, I shall see whether we can update the figure.

Mr. George Rodgers: Does my right hon. Friend appreciate that the fares of many bus companies have increased for children from half to two-thirds of the full adult fare and that this is imposing terrible burdens on low income families? In some cases it is taking a substantial part of the available income of the £6 a week. In these circumstances, does not my right hon. Friend consider that the report should be expedited?

Mr. Mulley: It is a conflict between those who, as we have heard from the hon. Member for Berwick-upon-Tweed, now have free transport and who are unwilling, even if they could afford it, to make a contribution, as against those under the statutory distance, where the local authority does not seek to exercise its discretion to provide free transport, who are having to meet these increased fares. One key part of my proposals, which were only tentative, is that there would be arrangements for remission of these charges in cases of hardship, as with school meals. But it is a very difficult decision for all concerned and until local authorities feel able to advise me as to their conclusions, I do not think that I can make any further progress.

Computers

Sir John Hall: asked the Secretary of State for Education and Science why,

in the year ended 31st March 1975, less than 27 per cent. of orders for computers under one Atlas power were placed with British manufacturers.

Mr. Mulley: I assume that the hon. Member is referring to orders placed by universities. Computers under one Atlas power are not subject to Government procurement policy, but I understand that universities order them from overseas manufacturers only when suitable British machines are not available.

Sir J. Hall: Does not the Minister agree that British manufacturers of these smaller computers are certainly equal to, if not superior to, foreign manufacturers? Is it not rather odd that, when the Government are urging people to "Buy British", his own Ministry should not urge universities to encourage our own British computer industry by buying computers equally satisfactory for their needs?

Mr. Mulley: I agree that it would be highly desirable that they should, but I am advised that they buy from abroad only when they feel that to do so meets their particular need better than what it available here. However, if the hon. Gentleman would care to contact me further to see whether we can improve collaboration between the British manufacturers and universities, I should be happy to work with him to that end.

Students (Accommodation)

Mr. Lane: asked the Secretary of State for Education and Science what steps he will take to improve the housing prospects for students in the academic year 1976–77.

Mr. Mulley: About 4,400 university residential places and about 1,400 polytechnic residential places were started during 1974–75 and most of these places should be brought into use by the next academic session. A further 2,500 university places and some 2,100 polytechnic places are expected to start in the current financial year and some at least should become available in the course of 1976–77.

Mr. Lane: I am grateful for that reply, as far as it goes, and for the sympathetic attitude of the Minister of State when I saw him recently. However, will the Secretary of State go a little further and make


clear that he and his colleagues will keep up all possible pressure on other Government Departments, notably the Department of the Environment in the context of the Rent Acts, so as to get still more accommodation available for students at the earliest possible date?

Mr. Mulley: I share the hon. Gentleman's concern to make more accommodation available for students. However, at the same time, I am not unaware of the problems of housing that affect people other than students, too. It is very difficult to say that in all circumstances students should be given priority. For example, I know that students—there is evidence to support this—are not anxious for amendment of the Rent Acts to give them any preferential treatment. Perhaps provision on the lines already started in Sheffield and under consideration elsewhere, with housing schemes undertaken in conjunction with the local authority and the Department of the Environment, might be a useful way forward.

Mrs. Knight: Will the right hon. Gentleman recognise that there is a major need for his Department to do something about this problem, bearing in mind that Government policy on rented properties has dried up the supply in many areas?

Mr. Mulley: I think that there is no evidence that a particular exemption for students would necessarily produce any additional accommodation.

Mr. Hooley: asked the Secretary of State for Education and Science if he will investigate factors which may discourage householders offering accommodation to students.

Mr. Mulley: I expect that the accommodation survey undertaken by the University Grants Committee at the beginning of this academic year will throw some light on the attitude of householders offering rooms to students.

Mr. Hooley: Does my right hon. Friend agree that one of the most useful and economical ways of extending student accommodation would be to encourage householders to accept students into their homes for a limited period with a sense of social duty as much as for profit? Is he aware that there are some fears that taxation

arrangements may inhibit that sort of arrangement, and that some householders are afraid that they may be liable for taxation if they offer accommodation?

Mr. Mulley: I am aware of that concern, but I think that it has been very much exaggerated. On 6th November the Inland Revenue issued a statement about the effect of capital gains tax on owner-occupiers who let accommodation. When lodgers live with a family, there is no taxation. In other instances the impact could be very small. My right hon. Friend the Chancellor of the Exchequer is conducting a review of the capital gains tax. I shall certainly draw this matter to his attention so that it can be brought within the purview of the report.

Mr. Evelyn King: Is the right hon. Gentleman aware that this matter needs investigation? Does not every expert know that our rent legislation is among the worst of any endured by any country in the Western world? Unless that legislation is amended, the problems of the homeless, including students, are certain to get worse and worse.

Mr. Mulley: I do not think that this matter falls within my departmental responsibility, but my impression, for what it is worth, is that without rent protection many of those who now have homes would be joining the homeless.

Youth Service

Mr. Steen: asked the Secretary of State for Education and Science what conclusions he has reached as a result of his current talks with youth organisations; and if he will make a statement as to the future of the youth service.

The Under-Secretary of State for Education and Science (Mr. Hugh Jenkins): I am sending the hon. Member a copy of the summary of the discussions on which the comments of participants have been sought. As he will see, there is a consensus in favour of some form of national consultative machinery, but no decision on this or on other matters will be reached until my right hon. Friend has received and considered all the comments and recommendations which have been made.

Mr. Steen: Will the Minister stop fiddling while Rome bums and realise


that 70,000 school leavers are still unemployed and that his consultations about the Youth Service and the state of that service are of no interest to them? Or is it that the Government youth leader in general is just not interested in young people?

Mr. Jenkins: In this country we do not go in for the fuhrer precept. On the serious side of the question, these consultations are intended precisely for the purpose—and the hon. Gentleman was active in suggesting that they should take place—of ensuring that the people engaged in the Youth Service, including representatives of the young people themselves, get together and have the opportunity of making recommendations. Those recommendations have been made. They are now being considered. Fairly early in the New Year I hope to bring forward to my right hon. Friend recommendations which will be a consensus of the body of opinion expressed in the past few months.

Discipline

Mr. Viggers: asked the Secretary of State for Education and Science if he is satisfied with the level of discipline in schools.

Mr. Adley: asked the Secretary of State for Education and Science if he is satisfied with the level of discipline in schools.

The Under-Secretary of State for Education and Science (Miss Joan Lestor): I doubt whether there has ever been a time when one could have been wholly satisfied about this. I realise that there are influences mainly outside the school which make discipline these days more difficult; but I do not accept that behaviour problems are as widespread as is often suggested.

Mr. Viggers: Is the hon. Lady aware of the widespread frustration that is felt by parents who are unable to assist in their children's education because they have no choice of school? Is she aware of a recent report that indicates that a number of school leavers are regarded as unemployable because of their attitude towards employment? Does she agree that the best long-term interests of a child are brought out in a disciplined environment, which is often not available?

Miss Lestor: The answer to most of those questions is "No". However, to give a general answer, I am impressed by the number of parents who take a part in their children's education by their involvement in the schools. We should do well to look not so much at the schools as at influences outside the schools. We must bear in mind the pressures to which young people are now subjected.

Mr. Grocott: Does my hon. Friend agree that those parents most conspicuous in abrogating any responsibility for their children's education are those who send them away to boarding schools?

Miss Lestor: That is a point of view with which I have a lot of sympathy.

Sir W. Elliott: Although I accept the hon. Lady's point about outside influences, does she accept that a growing number of parents are very concerned about the Government's over-emphasis on the type of school rather than an standards within schools? Will she support those members of the teaching profession who demand certain standards of dress and who, for instance, refuse to allow girls to wear jewellery?

Miss Lestor: Dress within schools is largely a matter for the schools and for the heads of schools. One of the main arguments for comprehensive reorganisation was that we wanted to make available to children opportunities for them all to reach the same standards. We do not want standards to be considered only in the context of selective education.

Science Research

Mr. Macfarlane: asked the Secretary of State for Education and Science what representations he has received requesting increased Government funds for the work of science research in the United Kingdom.

Mr. Mulley: I have received two memoranda on the general financial situation of the universities which have included a reference to their research requirements. Some of the research councils have also in their annual reports drawn attention to present financial restraints on their activities.

Mr. Macfarlane: I am grateful for the right hon. Gentleman's reply. Does he recognise the deep concern which exists in scientific and research circles because of the level of inflation and the effect that it is having on their research programmes? Will the right hon. Gentleman tell the House whether it is his Department which directs science policy, or whether responsibility is loosely fragmented through other Departments?

Mr. Mulley: As the hon. Gentleman will know, following the adoption by the previous Government of the Rothschild recommendations, the other Departments concerned with research have a consumer "interest and fund certain projects on that basis. My Department is responsible for general science policy. The advisory boards of the research councils which operate the funds between the councils are independent bodies. They decide the detailed application of the funds.

Dr. Hampson: Has the right hon. Gentleman seen the recent report of the Chief Statistician of the Department of the Environment and the Chairman of the Science Research Council drawing attention to the declining numbers entering post-graduate engineering courses, particularly in comparison with the position in Germany, and seeking to promote relations with industry to encourage manufacturing technology? What is his Department's thinking? What liaison does he have with other Department—for example, the Department of Industry—and with industry? As his Department did not bring forward a White Paper on the Public Expenditure Report on post-graduate education, although that Report was in existence for 18 months, will it now start bringing forward proposals to the House so that we can deal with this important issue?

Mr. Mulley: As regards engineering graduates, I recall that the figures for the current year are rather better than those for last year. I take it that the hon. Gentleman has not seen the important Press announcement made by the Science Research Council only last week about manufacturing technology, which referred to whether a teaching hospital should have, as it were, a "teaching factory". The council issued its statement last week and I shall send a copy to the hon. Gentleman.

Primary Schoolchildren (Starting Age)

Mrs. Knight: asked the Secretary of State for Education and Science what is his policy with regard to the starting age for primary schoolchildren.

Miss Joan Lestor: Local education authorities have a statutory obligation to provide full-time primary education for children from the beginning of the term following their fifth birthday, and discretion to admit the children at an earlier age. This discretion is governed for the time being by the need to restrain expenditure. Authorities can only admit children of three and four years of age up to the limit of the capacity of their nursery schools or classes. Children of this age should not be admitted to ordinary classes in infants schools except that rising-fives may be admitted to otherwise vacant places if any additional call thereby made on resources is only marginal.

Mrs. Knight: Does the hon. Lady accept that there is a vital need to have a clear policy and to stop the present shilly-shallying? Does she not agree that it is unfair that a child should have been firmly offered a school place in the fourth year only to have that offer withdrawn? That has often happened. Does she appreciate that frequently school uniforms have been bought and other arrangements have been made? Very often children have been initiated into assemblies and school plays on the understanding that they will start school. The situation now is that apparently they will be unable to start because of the hon. Lady's policy. Will she not think about the children and consider how the parents are to tell them that they are not being allowed to start school?

Miss Lestor: I thought that I had made the position perfectly clear to the hon. Lady when I worked out my detailed answer. The hon. Lady may have some particular problem in her constituency. I know that she is bringing a deputation to see me after the Christmas Recess to discuss the whole subject of the rising-fives and school-starting dates. I shall be happy to discuss any particular problems with her.

Mr. Crawshaw: May I assure my hon. Friend that many parents are distressed


by recent decisions by some local education authorities which mean that some children expecting to go to school at a certain time will now not be able to do so? People such as myself who felt that it was a retrograde step to increase the school-leaving age rather than reduce the school entry age feel that it is a further retrograde step that children are being deprived of several months at school at an age when their minds are most receptive.

Miss Lestor: The argument about whether we should raise the school-leaving age or concentrate resources on the pre-school child was debated by the House. We know what the decision was. Many hon. Members have very different views on the matter. Perhaps we shall be able to discuss it at some future date.
Whatever the change in policy may have been, the only statutory obligation upon local authorities is to provide full-time education for children for the term following their fifth birthday. There is no doubt that in some areas the earlier admission of children, for which there is no statutory obligation, will have to be curtailed.

Mr. Hurd: Will the hon. Lady take steps to inform Labour candidates and trades councils of her policy so that they will not continue to attack county councils whose only offence is to carry out her Department's policy on the rising fives?

Miss Lestor: If the hon. Gentleman will give me details as to where he thinks people are ill-informed about Government policy, I shall do my best to clarify the situation. If people read the answers given today, they will not be in any doubt.

Mr. Terry Walker: asked the Secretary of State for Education and Science whether he will bring forward legislation to make sure that all children receive full-time education from their fifth birthday.

Miss Joan Lestor: No, Sir.

Mr. Walker: Does my hon. Friend appreciate that that reply is disappointing? Is she aware that many of my constituents are extremely worried about the situation because their children do

not get to infant school at the proper time, and, if they do, they spend only a short time there? Is it not time that the Government introduced amending legislation to ensure that the onus is not left to local authorities? Should we not ensure that all children receive full-time education from their fifth birthday?

Miss Lestor: I am tempted to say that my reply disappoints me, too, to some extent, but it is very difficult to insist that schools should take in children haphazardly through the year. This would mean that some children, depending on their birth dates, would have advantages over others. But the law at present requires that children should receive full-time education from the start of the term following their fifth birthdays. Local authorities make their own arrangements if children wish to start earlier than that. This is an important point, but I would add that there are many children who would not benefit from starting school before their fifth birthdays. One wants to see a different type of provision for such children in nursery schools.

Dr. Boyson: Is the Minister aware that there is considerable feeling in all parties and among the public about the level of infant school teaching? Children who have only four or five terms at infant school are deprived right through junior and secondary school. I believe that there should be a movement towards a full two-year infant school period irrespective of when the birthday falls in the fifth year. What people resent about public expenditure cuts is their effect on the rising fives, since this will increase the level of deprivation for children throughout the country.

Miss Lestor: There is now a change in many areas towards a middle-school system, and problems relating to the relationships of children in the years between infant school and junior school are being dealt with. Although it is true that a child's birthday largely dictates how long a child stays in infant school—and I accept that many children benefit from being there for longer—it is true that, even with the present restrictions, many children are gaining admission to nursery school, play groups and other pre-school facilities. When everyone—including the hon. Member for Brent, North (Dr.


Boyson—faces restraint in public expenditure, it is helpful if hon. Members instance the areas which they do not want touched rather than make blanket assertions.

Mr. Heffer: Is the hon. Member for Brent, North (Dr. Boyson) aware that many of us are concerned about what happens when children get to school? Is the Minister aware that many of us are concerned about the idea, now being floated, that children should not have to learn the three Rs? Many of us believe that the three Rs are the most important part of education. Indeed, without learning them we should not be able to be so articulate in the House. Will my hon. Friend take note of the fact that it is not a reactionary concept that working-class children should be taught the three Rs?

Miss Lestor: I know of no school of thought of any renown which advocates that children should not be taught the three Rs. One finds many comments in the Bullock Report—a report I have read with great interest—about the methods of teaching the three Rs rather than about the complete absence of teaching them. Of course it is important that children should learn to read and write. Many educationists have been trying to establish the pace at which children should learn to read and write, and whether it is possible to decide upon an age when all children should be able to read and write.

Disabled Children

Mr. Ashley: asked the Secretary of State for Education and Science if he will take steps to provide special education for those disabled children who need it.

Miss Joan Lestor: It is the responsibility of the local education authorities to secure the provision of special education for children who are discovered to need it; and they have been invited to review this provision at a series of regional conferences which my Department has promoted this year. The number of places in special schools and classes has substantially increased through the building programmes authorised by the Department in recent years, and in the future my right hon. Friend will seek to ensure for handicapped children a fair share of available resources.

Mr. Ashley: I am grateful for that reply, but is my hon. Friend aware that

there is deep concern about the lack of special educational facilities for the 6,000 autistic children in Britain? Although those children cannot be helped medically, they can be helped by special education. Is my hon. Friend aware that no fewer than five out of six of these children are not receiving such help? In view of that deplorable and regrettable situation, will she give an assurance that the Secretary of State will contact local authorities and ask them to make provision for special education for all autistic children?

Miss Lestor: I share my hon. Friend's concern, particularly about autistic children. A great deal of work has been undertaken, and I think he knows that there are disagreements about the best way of dealing with these children. Local authorities inform us of the methods they employ. At the moment, there is a shortage of resources, but autistism should be given high priority when we examine the subject of the handicapped.

Sir John Hall: Does the Minister agree that we require specially trained and dedicated teachers to look after disabled children? Is she satisfied that training facilities are such as to provide the numbers of teachers required?

Miss Lestor: The fact that the calls for places in special schools have increased probably points to the fact that we are discovering handicap earlier than previously. Therefore, the hon. Gentleman is probably right to say that we should look more closely at the number of teachers being trained to meet what is likely to be a growing demand. I will take account of the hon. Gentleman's remarks.

Mr. Golding: Is my hon. Friend aware that Staffordshire County Council in providing good facilities for the handicapped in Newcastle-under-Lyme? Will she ensure that, when the regional conferences meet, they will discuss the provision to be made for small groups of handicapped children and facilities on a region-wide basis?

Miss Lestor: I shall give that consideration. I think that it is a very good idea.

Arts Council

Mr. Strauss: asked the Secretary of State for Education and Science what representations he has received from the


Arts Council with a view to making available to the Council further funds in respect of the current financial year.

Mr. Jessel: asked the Secretary of State for Education and Science if he will make a statement on finance for the arts, following the latest report of the Arts Council.

Mr. Hugh Jenkins: As I explained in the reply I gave to a question by my hon. Friend the Member for Edmonton (Mr. Graham) on 8th December, additional provision is proposed for the Arts Council which will provide it with an increase of 31 per cent. over the previous year.—[Official Report, Vol. 902, c. 461]

Mr. Strauss: Although the increase is gratifying, will my hon. Friend give an assurance that the amount made available to the Arts Council will be sufficient to enable the Arts Council to ensure the opening of the National Theatre on the due date and that there will be sufficient funds available to enable the various enterprises that it supports to continue their activities without any significant falling off in standards?

Mr. Jenkins: The object of the additional funds, which I hope will be approved by the House, is precisely to enable the Arts Council to carry out those two purposes. It is my sincere hope that the Council with those additional funds will find it possible to ensure that the National Theatre opens on the due date and also that this occurs without milking or making impossible the operation of the theatre throughout the rest of the country.

Mr. Biggs-Davison: As the popular Press frequently draws attention to what appear to be absurd projects for which the Arts Council makes grants, what is being done to give a balanced picture of the purposes to which the Council's money is put?

Mr. Jenkins: Perhaps the hon. Member has read the Arts Council's report, which was published recently. No one reading that could get the absurd and unbalanced picture which is sometimes conveyed in the popular Press. If anything happens which is a little peculiar, the Press sees that as a very good story, but that is not the whole story. The

Council has had very great success in supporting the arts throughout the country. It has supported art which has been seen by many people, but that is not news and we do not hear as much about it as we should.

Mr. St. John-Stevas: If the Chequers Guy Fawkes's strategy of investing in success is not entirely blown away by events later today, is it not reasonable to ask the hon. Gentleman to use every effort to see that first priority is given by the Government to investment in our greatest post-war success—the arts? Can he at least guarantee that the grant to the Arts Council in future will be sufficient to enable it to keep abreast of inflation and enable it to fulfil its existing commitments?

Mr. Jenkins: The proof of the pudding is in the eating and the supplementary grant I have just announced has enabled us to give the Council an increase of 31 per cent. over last year's figure. That is the best guarantee I can give the hon. Member for the future.

The Theatre

Mr. Hannam: asked the Secretary of State for Education and Science what recent steps he has taken to ensure the survival of theatre in the United Kingdom.

Mr. Hugh Jenkins: The survival of the theatre in the United Kingdom is the concern of many different organisations and individuals, including the Arts Council, local authorities and private promoters. I am sure that the supplementary estimate of £2·3 million, if approved, will help the Arts Council to meet the needs of the subsidised theatre as well as its other clients.

Mr. Hannam: Will the hon. Gentleman recognise that these last-minute grant announcements are causing a near breakdown in the living theatre where plans are having to be made now for tours next year? What type of grant will be made by the Government for the coming year is not known, so will the hon. Gentleman consider a triennial system so that the theatres' plans can be formalised and agreed?

Mr. Jenkins: The Arts Council, like everybody else, cannot escape entirely from the effects of inflation. That is why


the Government's plans for getting inflation under control are as important in the arts as anywhere else. It is useless to have a triennial system in an inflationary situation. The best way of proceeding is to meet the Arts Council's needs as best we can at the time. A triennial situation with forewarning is desirable and we shall return to it as soon as we can, but controlling inflation is the first necessity before returning to such a system.

Mr. Flannery: Is my hon. Friend aware that many people are more worried about the continued survival of the United Kingdom within the Common Market than about the survival of the theatre? But is he also aware that we should like a great deal more money to be given to the theatre? Does he agree that it ill becomes Opposition Members, who are constantly asking for cuts in expenditure, to ask for more money to be given to an organisation, even though we agree that it needs more money?

Mr. Jenkins: I think that my hon. Friend will agree that I have enough to do to ensure the survival of the theatre without taking on the survival of the United Kingdom as a whole.

Mr. Cormack: What representations has the hon. Gentleman made to Treasury Ministers about the removal of VAT from the theatre? Does he realise that this, above all, would help to create a prospect of certainty for the theatre?

Mr. Jenkins: Questions about VAT are for my right hon. Friend the Chancellor of the Exchequer, but within the grant given to the Arts Council an amount has been allowed for the replacement of the VAT it has to pay.

Mr. Robert Cooke: Is the hon. Gentleman aware that the subsidised theatre could learn a good deal from the commercial sector, particularly about making economic use of resources? Will he do his best to bring the two together?

Mr. Jenkins: The relationship between the subsidised and the commercial theatre has never been better.

Comprehensive Education

Mr. Norman Lamont: asked the Secretary of State for Education and

Science what discussions he has had with local authorities about the proposals in the Queen's Speech for bringing about comprehensive education.

Mr. Mulley: On 17th September I sent to the local authority associations, and the national bodies responsible for voluntary schools, a document outlining a possible form of legislation to give effect to Government policy on comprehensive reorganisation. On 10th and 13th October, my hon. Friend the Under-Secretary and I met these bodies to discuss the proposals.

Mr. Lamont: If the Government are confident that comprehensive education is so universally excellent, why are there still so many local authorities which refuse to publish details of examination results in comprehensive schools? Before the Government take the drastic step of making universal comprehensive education compulsory, should they not ensure that the consequences of comprehensive schooling are submitted to public examination and debate?

Mr. Mulley: I am very happy to have such debates and have already taken part in a number of them. I thought that this was the point of the debate initiated by the Opposition earlier this Session. Whether examination results are published is a matter for the authorities and schools concerned. I know of a number of authorities that do not publish results in respect of grammar schools. It works both ways.

Oral Answers to Questions — SECRETARY OF STATE FOR DEFENCE

Mr. Pattie: asked the Prime Minister whether he will dismiss the Secretary of State for Defence.

The Prime Minister (Mr. Harold Wilson): I refer the hon. Member to the reply which I gave to the hon. Member for Conway (Mr. Roberts) on 11th December.

Mr. Pattie: If the Prime Minister will not agree to put his right hon. Friend out of his misery by dismissing him, would he at least agree to give him his full support? Does the Prime Minister support that part of the Cabinet which believes that we should honour our NATO commitment


to the full, or the part which seems to believe in death by a thousand defence cuts?

The Prime Minister: Taking what I am sure was the serious content in the hon. Member's mind, if not in his words, I have already made clear, and I repeat it now, that there will be no reductions in defence expenditure that will reduce the effectiveness of our contribution to NATO. Any reduction will be on tail, not teeth.

Mr. Frank Allaun: Would my right hon. Friend confirm that the defence review, far from cutting expenditure, has actually increased it, as the Secretary of State for Defence has admitted? Does my right hon. Friend stand by our election commitment to reduce our proportion of resources devoted to arms to the level of Western European NATO countries, thus saving £1·2 billion a year for social needs and industrial re-equipment? Will my right hon. Friend refuse the cry for drastic cuts in almost everything except arms spending?

The Prime Minister: The effect of the defence review was substantially to reduce the defence programme that we inherited from the previous Government, whose members are still pressing for big increases in defence while talking at the same time about expenditure cuts. I fully accept what my hon. Friend has said in the second part of his question and I hope to have his full support in all measures affecting the expansion of our GNP, as well as in those cuts in defence that can be made without impairing our essential contribution to NATO which, I am sure, is the last thing he would want.

Mrs. Thatcher: As the subject of jobs is very much to the fore today, can the Prime Minister say how many jobs have been lost through the cuts already announced by the Secretary of State for Defence?

The Prime Minister: I would require notice of that question, but the answer has already been given in the House by my right hon. Friend. Since the right hon. Lady is absolutely right to stress the subject of jobs in highly vulnerable areas of the country, I take that as an indication that she will not be voting against the Government's proposals tonight.

Mrs. Thatcher: I assumed that the Prime Minister would know the answer.

The Prime Minister: It has been given to the House. It was before the Cabinet in all the discussions we had on the defence review, and it is a figure that we have accepted as tolerable, not least because there are big increases in the number of jobs connected with arms exports.

Oral Answers to Questions — UNITED STATES (CONSULTATIONS)

Mr. Thorpe: asked the Prime Minister what consultations he has recently had with the United States Government.

The Prime Minister: I had a full discussion with President Ford on matters of mutual interest at the economic summit meeting in Rambouillet last month. I have also had the opportunity of discussions with the President at other bilateral and international meetings in the course of the year, and continue by all appropriate means to keep in close touch with the Government of the United States.

Mr. Thorpe: Does the Prime Minister recall the Government's welcome endorsement of Dr. Kissinger's five-point plan at the World Food Conference in Rome designed to prevent fluctuations in the world prices of food and the supply of food stocks to developing countries in the Third World? Was it not a disappointment that when it had a 10million-ton grain surplus the United States should automatically put it on the commercial market and sell it to the highest bidder, which in this case was the Soviet Union? Is not that a negation of the spirit of Rome, which was that there should be international stockpiling at agreed levels to prevent fluctuations in prices to the Third World? Is it not time that we made representations to America that if this sort of policy continues, the spirit of Rome will be dead?

The Prime Minister: The right hon. Gentleman is perfectly right to raise this matter. We have had discussions with the United States. The quantities of food available for developing and starving countries has been considerably increased in the past year or two. Dr. Kissinger gave full support to the proposals which I made at the Commonwealth Conference in Jamaica in relation to raw materials,


foodstuffs and the proper planning of commodity agreements. These matters have been further carried forward by the Special Session of the United Nations, where the British proposals received warm support.

Mr. John Garrett: Has my right hon. Friend had discussions with the American Government about their view of the continued commercial viability of the Chrysler Corporation?

The Prime Minister: There is no American ministerial responsibility here. We are concerned with Chrysler's overseas activities, in this case in the United Kingdom. At Rambouillet I had a brief discussion with President Ford—as I think I told the House—but, of course, the future of the Chrysler Corporation within this country is a matter for Her Majesty's Government and the House. My right hon. Friend will be making a statement on this matter at the end of Questions.

Mr. Amery: Will the Prime Minister make clear to the President of the United States that Her Majesty's Government would fully support such steps as he may think it right to take to support the anti-Soviet forces now fighting in Angola?

The Prime Minister: We have made clear our position on Angola. We believe that there is no place for an intervention by the United Kingdom, and we are extremely anxious to see that Angola does not become a cockpit of all the major Powers.

Oral Answers to Questions — SECRETARY OF STATE FOR EMPLOYMENT

Mr. George Gardiner: asked the Prime Minister if he will dismiss the Secretary of State for Employment.

The Prime Minister: I refer the hon. Member to the reply which I gave to the hon. Member for Conway (Mr. Roberts) on 11th December.

Mr. Gardiner: Will the Prime Minister say whether the Secretary of State endorsed the new Chequers industrial strategy that has now been turned upside down? How does the Prime Minister expect the Secretary of State to win union acceptance of the redundancies necessary

at, for example, the British Steel Corporation in view of the vast amount of good taxpayers' money being thrown after bad jobs at Chrysler?

The Prime Minister: The hon. Gentleman always imports a number of thoughts into his supplementary questions, but the position is that the whole Government—indeed, my right hon. Friend was at Chequers—endorsed the policies there. The position of the Chrysler Corporation will be explained to the House by my right hon. Friend at the end of Questions. If the hon. Gentleman is telling us that the Tory Party will vote for an immense number of lost jobs, we shall certainly want to know about it.

Mr. Kilroy-Silk: Will the Prime Minister call a meeting of the Secretaries of State for Employment and Industry with a view to devising policies for the industrial regeneration of Merseyside? Does he realise that, with the level of unemployment on Merseyside—especially in Kirkby—well above that of the national average, the people of that area would willingly accept half the money that is being given to Chrysler to create jobs on Merseyside and to stop the loss of jobs which has been going on for well over a decade?

The Prime Minister: I refer my hon. Friend and constituency neighbour to the announcements made by my right hon. Friend the Chancellor of the Exchequer which have had a considerable effect on Merseyside. I ask my hon. Friend to await the debate on the economic situation tomorrow, when my right hon. Friend will make a further statement. I do not recall that my hon. Friend voted against the Government's policy in relation to British Leyland. Some of his constituents and some of mine work for British Leyland on Merseyside.

Oral Answers to Questions — PRIME MINISTER (ENGAGEMENTS)

Mr. Freud: asked the Prime Minister if he will list his engagements for Tuesday 16th December.

The Prime Minister: I shall be holding a number of meetings with my ministerial colleagues and others throughout today. This evening I hope to have an audience of Her Majesty the Queen.

Mr. Freud: As the Prime Minister is now—at Question Time—fulfilling one of his engagements, will he recognise the unsatisfactory state of Prime Minister's Question Time as a means of calling the first Minister to account for his actions? Will he recognise the frustration of Back Benchers at having to table Questions in the currently prescribed form, and will he include a review of Question Time in his review of the procedure and practice of the House of Commons as promised in the Queen's Speech?

The Prime Minister: This matter was recently surveyed by a Select Committee of the House and some changes were made. If the hon. Gentleman has any views about Question Time, any suggestions will be a matter for the Select Committee, or whatever body is set up for the review of parliamentary procedure. In recent months, with the growth of syndicated Questions, when I grouped Questions, as I told the House I would, this meant that Questions Q3, Q4 or Q5 could not be reached. That is why I am now answering Questions singly, I hope to the satisfaction of the House.

Mr. Wellbeloved: I recognise that the Prime Minister's engagements for today may make it impossible for him to meet the Parliamentary Labour Party, but could he squeeze in a meeting tomorrow on the Chrysler affair? is my right hon. Friend aware that the Labour Party manifesto lays down that when public money is used to prop up industry, there should be the option of accountability to the nation by the company assisted? Does my right hon. Friend agree that the Parliamentary Labour Party is as much the custodian of the manifesto as anyone else and that an urgent meeting of the Parliamentary Labour Party on the subject of Chrysler is vital?

The Prime Minister: The question of a meeting with the Parliamentary Labour Party is a matter for the Liaison Committee, which was recently elected. That committee will decide. As to the custodianship of the manifesto, I understand that there are at least two groups within the party each claiming to be the exclusive custodian of the manifesto. I have made clear over a long period that I am always prepared to meet the Parliamentary Labour Party, but not separate groups from within it.

Mr. Baker: As today develops, does the Prime Minister think that the Government Benches will be able to speak with a united voice? Is it not manifestly clear that the only thing that keeps his Government together is the courageous determination of certain Ministers not to resign?

The Prime Minister: No, Sir, the hon. Gentleman is quite wrong. On very difficult issues such as the one he has in mind, which the House will be debating in a few minutes' time, it is possible not only for various people to have different views, but to have to take account of the situation under which, at first, Mr. Riccardo and the Chrysler Corporation said that they were getting out at the end of November and would not put in any further money. When Chrysler made significant changes, the matter had to be reviewed. But I draw a distinction—and I am sure that the hon. Gentleman, with his vast experience, will understand this—between those who argue the matter around the Cabinet table and those who, after leaving the Cabinet, disown the very line that they supported at the time.

Oral Answers to Questions — QUESTIONS TO MINISTERS

Mr. Raphael Tuck: On a point of order, Mr. Speaker. In Question No. 25, which was not reached, there is clearly a misprint which makes it meaningless. It should read:
what proposals he has received to move Parmitters School to Watford".
Perhaps something might be done to rectify that.

Mr. Speaker: No doubt the correction will be made.

CHRYSLER UK LIMITED

The Secretary of State for Industry (Mr. Eric G. Varley): With permission, Mr. Speaker, I should like to make a statement about Chrysler.
As the House knows, Her Majesty's Government first learnt of the possibility of Chrysler withdrawing from this country from reports of a Press conference taken by the Chairman, Mr. Riccardo, at the end of October. This was despite the approach made to him by my predecessor,


my right hon. Friend the Secretary of State for Energy, in January and the very closest contacts maintained through the year with the senior management of Chrysler UK.
I at once wrote to Mr. Riccardo to seek clarification. On 3rd November he and his team told my right hon. Friend the Prime Minister, myself and other colleagues that his Board had decided that it would provide no further funds for Chrysler UK.
From the time Chrysler Corporation took over in 1967 to the end of this year Chrysler UK was expected to have a cumulative trading loss of £80 million, with the expectation of losses continuing at a substantial rate next year. The Board of Chrysler Corporation had decided that it could not continue to meet such losses from its own resources.
Accordingly it told us that it would start liquidating Chrysler UK from the end of November—that was in under four weeks from that meeting—unless Her Majesty's Government in the meantime took it over. This was the fearsome choice we have been wrestling with ever since.

The Prime Minister (Mr. Harold Wilson): Hear, hear.

Mr. Varley: Liquidation would put 25,000 people out of work in Chrysler, with at least as many more in supplying and related industries. We should lose the important contract to supply car kits for assembly in Iran, with all the effect that this might have on our prospects of further trade with that country.
We should lose other exports. The gap left by the disappearance of Chrysler from our market would cause serious damage to our balance of payments.
On the other hand, just to take over Chrysler UK completely—even with a £35 million payment which Mr. Riccardo subsequently offered us in later intensive negotiations—would have passed over to us very substantial existing liabilities and heavier still prospective financial commitments. We should have had to take direct responsibility for heavy redundancies whatever happened—heavier than those which, as I shall tell the House later, will now have to be faced. We should have become responsible for the direction of the United Kingdom operation even though Chrysler offered

to provide the necessary managerial, technical and distributing skills and facilities in this country and abroad and the necessary design assistance for a new model range.
We should have been dependent on Chrysler, but it would have had power without responsibility and without the incentive to minimise losses and maximise profits and to make a real sucess of this difficult operation.
We did not consider that this would be a satisfactory or indeed tolerable situation for the Government to be in.
We have studied many schemes with the Chrysler team. Ministers have had 11 meetings with Mr. Riccardo, and in addition there have been many meetings with officials. I pay tribute to officials, who have worked for exceptionally long hours and with great professional skill to suport me and other Ministers in these operations.
I can now tell the House that the Government and Chrysler have achieved an agreement. We were prepared to accept an alternative solution only when Chrysler eight days ago made it clear that it would now be prepared to remain in this country, and that Chrysler UK would have its full support.
It will streamline its operations by moving assembly of the Avenger car from Ryton to Linwood. Of its present 25,000 employees there will have to be some 8,000 redundancies, but the stark choice is between keeping this opportunity to maintain these 17,000 jobs or losing not only the full 25,000 but also many others in firms which depend on Chrysler. The Chrysler management is now telling representatives of its workforce how this necessary rationalisation will affect them.
The redundancies will fall most heavily in the Midlands, where we have the best prospects of providing other work as trade picks up. The Employment and Training Services Agencies stand ready to help in all possible ways.
Because the Chrysler Corporation made clear throughout that it was not in a position to advance the necessary further funds to the United Kingdom company we have devised with it a scheme to share risks and expenditures. For next year it forecast a loss of £40 million. We have


offered to meet this, in addition to meeting half of additional losses, if any, up to limits of a further £20 million next year, £20 million in 1977, £15 million in 1978 and £10 million in 1979, making a total commitment to provide up to—72·5 million over these four years. But together we aim to turn these losses into profits, and we shall share equally with Chrysler in any profits which accrue in these years.
We have also undertaken to provide a loan of £55 million to finance capital expenditure on plant and model development. This loan will be at a rate of interest no less than the Government lending rate.
The Chrysler Corporation in return will guarantee the first half of this amount, amounting to £28 million. It will also provide £10 million to £12 million for the first stage of a programme to enable the C6 Alpine model to be assembled at Ryton from kits imported from Simca in France, and if this enterprise is successful—as we must endeavour to see that it is—later stages to be considered would provide for the United Kingdom supplies for these cars to be increased from rather over 50 per cent. to 100 per cent. This would involve a further capital development programme for Chrysler UK of about £23 million.
The effect of this scheme is to provide work at Ryton in place of the Avenger assembly. In the early stages there will be 2,500 redundancies there. There will also be substantial loss of jobs initially at Linwood.
Chrysler UK has not been able to convert its short-term liabilities into medium-term finance. The London and Scottish clearing banks have agreed in principle to provide a medium-term loan up to £35 million against the guarantee of the Treasury, which would be counter-guaranteed by the Chrysler Corporation. All these measures of financial support have of course been offered subject to our obtaining parliamentary approval.
The total potential commitment will be £162·5 million, but this includes the maximum guarantee liability for the £35 million medium-term loan, the full £28 million of capital development which is counter-guaranteed by Chrysler Corporation, and the maximum possible loss payments year by year. These guarantee commitments are payable only if the

Chrysler Corporation were unable to honour them. That is the maximum extent of our commitment. It is important to make clear that it is not open-ended; it is clearly defined.
The responsibility for the success of the operation is also Chrysler's.
As activities in this country have been running down for some weeks, it is essential to get work started as soon as possible. I shall therefore be laying the necessary Order in the House later today.
The House will thus see that the situation has changed dramatically since November. The Chrysler Corporation, instead of pulling out completely, as was its earlier intention, is now prepared to increase substantially its financial commitment in this country. It also intends that Chrysler UK will now play an important and expanding role in its worldwide activities, and that it is to be fully integrated into the corporation's overseas market structure.
In addition, the Board of Chrysler Corporation has approved an important declaration of intent about the long-term future of Chrysler UK. Copies of its declaration of intent are available in the Vote Office.
We have the basis for a continuing operation into the 1980s which will provide jobs for 17,000 out of the present 25,000 work force, not counting many more jobs in related firms.
We have safeguarded the important Iran contract and avoided further damaging consequences to our balance of trade from the disappearance of Chrysler production in this country.
We shall be appointing two directors to the Chrysler UK Board and will be developing a planning agreement with the company.
The whole future of this operation depends on the fullest co-operation of the work force in accepting redundancies and the movement of work between plants and in collaborating to improve productivity. I have kept in touch with the trade union leaders and with Members from Chrysler constituencies, and further necessary consultations are now in train.
It will not help to try to allocate blame for all the industrial relations trouble of the past which is highlighted in the Central Policy Review Staff Report


which has just been published. We mustall—Government, management and representatives of the work force—ensure that industrial relations are put on a sound basis so as to secure the future of this operation in the United Kingdom, with all that this implies for jobs and the balance of payments.

Several Hon. Members: rose—

Mr. Speaker: Order. I am now in a difficulty, and so is the House, because a great many right hon. and hon. Members wish to speak in the debate that is to follow, almost all of them with equally good claims. Therefore, I hope that questions will now be put to extract information and not to advance arguments.

Mr. Heseltine: Having heard the enormity of the commitment, the House will understand why the Secretary of State for Industry threatened to resign. He would have been well advised to do so. Will the right hon. Gentleman understand that we cannot appreciate why, in announcing the deal, he has abandoned the whole of the recommendations of the CPRS Report which made it clear that he should have gone in a totally different direction to the one that he has taken?
What does the right hon. Gentleman believe will be the effect on the balance of payments of the decisions that he has announced today?
What consultations have there been with the dealers, upon whom the right hon. Gentleman must be dependent for the success of this strategy?
Will the right hon. Gentleman say how many of the 8,000 redundancies will be in the Midlands?
To put the deal in perspective, having announced what will be the expenditure by the Government next year on Chrysler UK, will the right hon. Gentleman compare it with the expenditure by the American company in the United Kingdom next year?
Finally, will the right hon. Gentleman understand that, in the view of the vast majority of right hon. and hon. Members, the Government have now abandoned their Chequers strategy and, with it, what little respect they were entitled to expect?

Mr. Varley: In the debate that we shall be having later, I hope to relate the action that the Government have taken to the CPRS Report, when I think that the hon. Member for Henley (Mr. Heseltine) will see that, far from abandoning that Report, the slimming-down operation of Chrysler UK is in line with it.
As for the effect on our balance of payments, we were told by the Iranians that they attached a good deal of importance to the continuation of the knock-up kits supplied from the Stoke plant. That was in danger and would have seriously affected our balance of payments.
The dealers are another vital element. There are 850 exclusive Chrysler dealers in the United Kingdom and they have made it plain to my hon. Friend the Minister of State that they attach importance to the Chrysler company continuing in this country.
As for redundancies, those in the Midlands will be about 5,500, but this would have been much worse if it were not for the Chrysler commitment to keep the Ryton plant operating on the basis of bringing in work from France—lthe C6 Alpine car. I hope that the hon. Gentleman will not jump to conclusions about this. He should study my statement and listen carefully to what I shall be saying in the debate. I think that he will change dramatically his view that this is against the Government's overall policy for the car industry or detracts in any way from our industrial strategy.

Mr. Buchan: Will my right hon. Friend say more about his reference to the substantial loss of jobs at Linwood, initially? Will he quantify that? Will there be a build-up shortly afterwards if and when the Avenger is transferred to Linwood?

Mr. Varley: The current level of employment at Linwood is about 7,000. There will be about 3,000 immediate redundancies because of the phasing out of the Imp and, later, the Hunter. But there will be a build-up later on, and the level of employment in August next year, assuming the smooth transition of the Avenger work to Linwood, will mean that we shall be able to restore some jobs and that employment at that time, in August 1976, will be about 5,500.

Mr. Richard Wainwright: Will the Secretary of State help us to reconcile Chrysler's declaration of intent, especially with regard to expansion and new models, with the relatively modest amount that it is committing to the operation? Where will Chrysler get the immediate facilities for an increase of working capital and for financial losses which may go over the budget? Has Chrysler overdraft facilities which have not been mentioned in the right hon. Gentleman's statement?
What access to capital markets does Chrysler envisage for the latter part of its intended development programme in, say, 1978 and 1979?

Mr. Varley: I hope to be able to say more about this when we debate the matter. The funds for Chrysler's capital development programme of £55 million will be provided as a loan to Chrysler from the Government and it is secured on the assets of the Chrysler Corporation not Chrysler UK. As far as we can envisage at the moment, this finance will be adequate for the development plans that we have outlined today.

Mr. Duffy: How can my right hon. Friend reconcile his announced funding proposals for Chrysler—a privately-owned overseas corporation amongst whose longer-term beneficiaries American shareholders are more likely to figure than any British employees—with the tougher commercial criteria announced last week to British Leyland workers before they can receive any more public money, even thought they are employed by a British corporation that is publicly owned? Will my right hon. Friend assure the House that the rescue of the first will not prejudice the survival of the second?

Mr. Varley: I hope that my hon. Friend does not think that the support that I have announced today means that the whole of Chrysler UK is supported. There are many painful decisions which have to be taken. For example, 8,000 redundancies arise immediately. That is in line not only with the CPRS Report but with the views of the Select Committee chaired by my hon. Friend. This is not a soft option, and it will be painful for those working for Chrysler UK.

Mr. Peter Walker: Is the right hon. Gentleman satisfied that the £162·5 million

which the Government have committed to Chrysler is the best way of using that sum of money to reduce unemployment? Is he satisfied, further, that a region such as the Midlands, where unemployment has trebled in the past two years, where the number of vacancies has gone down faster than in any other region and where there are 14 unemployed for every vacancy, is the ideal region at which to deal this vital blow?

Mr. Varley: The right hon. Gentleman cannot have it both ways. First, he asks me whether the £1621 million contingent liability—I emphasise the words "contingent liability"—is justified. Then he makes a special plea for the Midlands in supporting the whole of the operation. He should sort himself out on this. Our commitment is fully justified. I agree that it is harsh for the West Midlands, but the prospect of a total closedown at Linwood, with no alternative work, would have been even more severe for those in that area.

Mr. Henderson: If the right hon. Gentleman considers that the redundancies are falling most heavily on the West Midlands, how does that explain that view, in terms of the proportion of Scottish workers at Linwood who will be out of a job as a result? Can he tell us whether any of the new models coming forward in the next two or three years will be allocated to Linwood? Will he take this opportunity to pay a tribute to the SNP voters of Bishopbriggs and Bo'ness, who kept Linwood open?

Mr. Varley: I know that the SNP lost no opportunity to be opportunistic and to use every tragic circumstance to increase its votes. I wish that the Scottish National Party would act more responsibly in these matters. It is not only the car industry to which this applies: when it comes to the steel industry and any of the other severe problems of British industry, one can always rely on Members of the SNP to try to make the most out of it for their own political benefit.
To answer the hon. Member's serious question, there are certainly the more immediate redundancies at Linwood because of the phasing out of the Imp and the Hunter, but the transfer of work and the new model—the foreshortened


Avenger car—which Linwood will get will mean that, by August of next year, about 1,500 of the 3,000 job losses will be restored.

Mr. Les Huckfield: Will my right hon. Friend accept that many of us recognise that the Government had a difficult decision to make and that we welcome their initiative in trying to save jobs, although this will still present a savage blow to Coventry? Will he further accept, however, that the problem with the last set of undertakings given by the Chrysler Corporation in 1967 was that they totally failed to bind Chrysler? What is to stop the Chrysler Corporation coming back to the Government in two years with exactly the same demands, threatening once more to pull out? Did my right hon. Friend not at all, during the negotiations, consider either putting somebody from the Government on the board or, better still, taking a stake in the company itself?

Mr. Varley: Part of the support operation was to ensure that Chrysler United Kingdom would be firmly locked into the world-wide operations of the Chrysler Corporation. If we cannot achieve that, there is not much hope for the company at all. I think that the agreement that we have reached and the declaration of intent spells that out. It is impossible to give the declaration of intent legal force, just as it was impossible in 1967 to give that declaration legal force. In fact, I think that the 1967 declaration was relaxed marginally by the previous Conservative Government in 1973. But one thing that is happening as a result of this arrangement is that Chrysler Corporation is committing funds immediately to this operation. As time goes on, and if it becomes a success, it will commit even more money.

Miss Harvie Anderson: Will the right hon. Gentleman accept that anyone with a close connection with Linwood must accept that a rescue operation was necessary? Will he tell the House that there is absolutely no alternative employment in the area? Will he also accept that the extent of help given is something that will be highly criticised, not only by members of my party but also by the taxpayer and by other industries, and that there is a grave question whether the nation can afford this amount?

Mr. Varley: Again, I think that the right hon. Lady, who I know is usually very fair about these things, is being schizophrenic. On the one hand, she points out, properly, the difficulties at Linwood and the problems of attracting new work to the area. Then she goes on to criticise the amount of aid given. She cannot have it both ways. Linwood was a problem that the Government had to face, and I think that we have faced it realistically.

Mr. Palmer: Is my right hon. Friend aware that many of us—perhaps all of us—on the Government side are extremely unhappy about this matter? Can he tell us why British taxpayers' money, poured into this bankrupt American concern, will make it pay when it has not paid in the recent past? Is that not the real issue?

Mr. Varley: I do not think that my hon. Friend is right to refer to the Chrysler Corporation as a bankrupt company. The Chrysler Corporation is in a different situation from that of Chrysler UK. It is true that Chrysler UK has lost money, I think, for six years out of the last nine, one of the problems, which one of my hon. Friends has just expressed, is that it had no new models. As a result of the agreement that we have reached, there will be new models coming along. We hope that, integrated within the international operations of Chrysler Corporation, it will be a success.

Mr. Hal Miller: Will the right hon. Gentleman tell the House whether, in pursuit of the objectives of the CPRS Report, he will insist on an equal percentage of cuts in employee numbers at British Leyland? Quite apart from the question of manning, will he address himself to the subject of capacity? Can the capacity available at Chrysler, in the light of the over-capacity noted in every report on this industry, ensure that it has a viable long-term future?

Mr. Varley: The reduction in capacity in Chrysler UK as a result of this operation is 25 per cent. That is a considerable reduction. I think that the reduction in manning is even higher than that—perhaps 35 per cent.—but I am not absolutely clear on that. The reduction in capacity is 25 per cent. and the reduction in manning might be as high as 35 per


cent. When the hon. Member has had a chance to refresh his memory and to look at the CPRS Report again, I think that he will see that this is generally in line with the predictions, forecasts and recommendations in that Report. As for British Leyland, it should not escape the attention of the House that, in the last 12 months, its labour force has been reduced by 28,000.

Mrs. Renée Short: Is my right hon. Friend aware that his statement will be received with great concern in the West Midlands? What jobs does he expect the displaced car workers to go to after the training that he has mentioned? The jobs just are not there. How does he equate his largesse to this American multinational firm with his refusal to help Norton Villiers Triumph, for example, and the crisis facing the railways, which has brought a lobby to the House today? What guarantees has he from Chrysler that the management of the British end will be improved in order to turn out a better product?

Mr. Varley: My hon. Friend will be aware that I announced that there will be two Government-appointed directors on the board of Chysler UK. I think that our decision can be related realistically to the attitude that the Government have taken to the motor cycle industry. I am pleased that my hon. Friend has raised the question of that industry, although it is not strictly within the scope of this statement. The last time that we debated this matter, my hon. Friend did not bother to turn up. [Interruption.] My hon. Friend asked about the employment prospects in the West Midlands. I do not think that it has escaped her attention that we are suffering the worst recession for 30 years. When we have suffered recessions of less severity than this one, the upturn has always been quicker and more marked in the West Midlands than elsewhere.

Mr. Alan Clark: Will the Minister enlighten the House about the balance of payments aspect? If the injection of public money is related to the Iranian contract, it is the equivalent of buying on the foreign exchange market at the rate of $1·30 to the pound. However, if it is followed by deductions for the purchase of kits from France and the remittance

of money to the parent company, it is probable that we shall be in net deficit on the foreign exchange account.

Mr. Varley: I do not think that is so. The Iranian contract is worth, I believe, £100 million a year. Reference has been made to the Ryton operation. It will not have escaped the hon. Gentleman's attention that I said that initially only 50 per cent. of the work would arise there. As time goes by, if it is successful, more of the work will be undertaken in this country. There is another point concerning the balance of payments, which the hon. Gentleman should realise. Chrysler has about 5 per cent. or 6 per cent. of the British market. It is were to go, its share of the market could well be taken up by importers.

Mr. Mackintosh: I understood my right hon. Friend to say that there would be 5,500 jobs retained at Linwood. Can he give us the precise cost to the Exchequer of retaining these Scottish jobs? I understand that the Cabinet has recently decided on cuts in the health, housing, education and road programmes in Scotland. Would not the leaving of the same amount of public expenditure in those areas have left more jobs in those areas? If that were so we would have had some houses, schools and roads, whereas the likely outcome of these proposals is that we shall still have just one uneconomic car factory.

Mr. Varley: I do not think that it would be appropriate for me to comment on some of the aspects raised by my hon. Friend about health, and so on. However, there is one simple calculation that my hon. Friend should make. He should try to cost, as we have done, what would be the payments from the Exchequer if 25,000 people were immediately declared redundant, and probably the same number in the supplying industries. We calculated that cost as about £150 million a year, which is a considerable sum. Far from believing, as my hon. Friend does, that this will not be successful, we believe that, given good will on both sides, it will be successful.

Mr. Churchill: Is the Secretary of State aware that the Government's announcement today will be seen as an act of gross economic mismanagement and of political cowardice, based on party


political fear of Scottish nationalism? Is he further aware that there will be great anger among English workers be cause their jobs are being sold down the drain so that the Labour Government can appease the Scottish National Party?

Mr. Varley: I have listened to the hon. Gentleman's extravagant remarks on many occasions in this House. I recall one occasion when I made a statement about nuclear reactors, and about the steam-generated heavy water reactors being the next generation of nuclear reactors. He told me that the workers in his constituency had been betrayed. Far from it; the workers of his constituency sent a telegram congratulating the Government on their decision. I do not think that we need take the hon. Gentleman's strictures all that seriously.

Mr. Molloy: Is my hon. Friend aware that the whole sad saga of the Chrysler business is simply a repetition of the Rolls-Royce disaster? Both are classic examples of the continual failure of capitalist private enterprise. It lies ill in the mouth of any Conservative Member even to have the gall to speak about it. Does my right hon. Friend agree that the money he is prepared to spend to bolster up a failing capitalist private enterprise disaster would have been better spent on some of the publicly-owned industries of Great Britain that are struggling under difficult circumstances because of the undermining of their efforts by private enterprise, which, indeed, they are subsidising—[Interruption.] I intend to carry on telling as much of the truth as possible, as opposed to the hypocrisy of Conservative Members.

Mr. Speaker: Order. I asked hon. Members not go get into area of argument. I think that the hon. Member for Ealing, North (Mr. Molloy) is doing so.

Mr. Molloy: There was a great deal of argument long before I spoke, Mr. Speaker. Will my right hon. Friend assure the House that if no practical results are forthcoming from this public aid to a private company he will see that such action is never repeated?

Mr. Varley: I know that my hon. Friend appreciates that is one of the most difficult industrial decisions that

have faced the Government. We have been struggling with the serious problem of the prospects of 50,000 men or more being thrown on the scrapheap in a few weeks' time. I do not believe that any British Government would have washed their hands of the situation. They would be bound to look at it and see how they could ameliorate and help the situation, and show sympathy and understanding.

Mr. John Davies: In choosing to reply to my right hon. Friend the Member for Worcester (Mr. Walker) by attacking him, the Secretary of State conveniently managed to avoid answering his question. The truth is that on the figures given—the £162 million is not wholly contingent—for 17,000 jobs saved, the cost per job would seem to work out at nearly £10,000. Can the Secretary of State really assure us that the vast sum of nearly £10,000 per job is better employed in this way than in finding work for the millions of unemployed, whose numbers are growing daily?

Mr. Varley: The right hon. Gentleman's figuring is all wrong. When he has had time to study the figures and the contingent liability he will realise that that is not the case. However, it is highly appropriate that the right hon. Gentleman should ask this question, because he has been in exactly the same position as I am in now. He will remember the difficulties he had with the Upper Clyde Shipbuilders, when he, as the Secretary of State for Trade and Industry, decided that help had to be given. Therefore, rather than make carping criticisms it would be better for him to realise and to express to the House the difficulties that are involved.

Mr. Heffer: Is my right hon. Friend aware that most Labour Members believe that it is quite right for the Government to take this action to defend and save as many jobs as possible? Is he also aware that many of us believe that in the process of doing so the Government should have carried out the Labour Party manifesto commitment to take over or to take an appropriate share in any companies that are desperate in this way? Is he aware that although we support the Government in saving the jobs, we shall look carefully at the final package when it is presented to the House in an Order?


We trust that the Government will reconsider this matter and concern themselves with taking an appropriate share of equity in line with Labour Party policy.

Mr. Varley: The primary consideration was to ensure that this slimmed-down motor car company should be as tightly integrated as possible into Chrysler's world-wide operations. If that had not been done I do not think that it would have had any chance of success. We are satisfied that we have an agreement to that extent. My hon. Friend is right to say that the House will want to scrutinise the Order that I shall be laying before the House later today. I am sure that we can go some way to satisfying him that proper accountability will be maintained on the basis of the Government-appointed directors, the re-activating of the Chrysler UK worker participation scheme and the planning agreement that we hope to have with that company.

Several Hon. Members: rose—

Mr. Speaker: Order. We must now move on to the debate.

STATUTORY INSTRUMENTS, ETC.

Ordered,
That Commission Document No. R/39/75 relating to Migrant Workers be referred to a Standing Committee on Statutory Instruments, etc.—[Mr. Edward Short.]

Ordered,
That Commisson Document No. S/1636/75 relating to Imports of Textiles from Hong Kong be referred to a Standing Committee on Statutory Instruments, etc.—[Mr. Edward Short.]

Orders of the Day — SUPPLY

[3RD ALLOTTED DAY],—considered

Orders of the Day — DEFENCE ESTIMATES, 1976…77 (VOTE ON ACCOUNT)

Resolved,
That a sum, not exceeding £2,140,121,000, be granted to Her Majesty out of the Consolidated Fund, on account, for or towards defraying the charges for Defence Services for the year ending on 31st March 1977, as set out in House of Commons Paper No. 29.

Orders of the Day — CIVIL ESTIMATES, 1976–77 (VOTE ON ACCOUNT)

Motion made, and Question proposed,
That a sum, not exceeding £11,704,621,000, be granted to Her Majesty out of the Consolidated Fund, on account, for or towards defraying the charges for Civil Services for the year ending on 31st March 1977, as set out in House of Commons Paper No. 30.—[Mr. Robert Sheldon.]

4.12 p.m.

Mr. John Pardoe: I do not wish to delay the House for more than a few minutes because I appreciate that it wishes to debate a matter which will involve additional public expenditure expenditure has been so wildly out of control as it has been over the past two of perhaps £162 million. To put the matter in perspective, I wish to spend about four minutes in questioning a matter of some importance which will cost the public purse no less than £17 billion. The figure of £17,000 million is what we are being asked to agree on the nod this afternoon without any debate or Division. It seems that this is a matter of importance which we are at least entitled to question.
I recognise immediately that the representatives of the two-party Establishment in this House may say that there is nothing new about that, that each has done it before. That is no excuse. It merely serves to point out the lamentable failure of this House to exercise proper control over the details of public expenditure in the past under successive Governments of different political persuasions.
In any case, we are in a new situation. There has never been a time when public


or three years. There never has been a time when we have not been able to debate this matter in some detail before voting for these substantial sums of money. Past procedures have not worked and they cannot therefore be called in aid of today's procedure, even if events had not magnified the importance of what we are doing. The first two Votes on Account—one of which we have agreed to, the second of which we are now discussing—together account for £14 billion.
What is a Vote on Account? What we are in principle being asked to do is to vote money for the early months of the forthcoming financial year starting next April—not the current financial year—to enable the Government to plan ahead in the knowledge that money will be made available for the conduct of public business. It is an advance payment on the full Estimates. Precedent decrees that we vote for an Estimate which is based on a percentage of this year's expenditure. But this year's expenditure is already wildly out of control. So why should we accept the mere statistical sleight of hand which we have accepted in the past?
This year's expenditure has not been debated in this House so there is no such control over expenditure. There has been no debate whatever on the public expenditure White Paper published on 30th January 1975. There has been no debate on the principles of public expenditure in this year since January 1974.

Mr. Patrick Cormack: Shame!

Mr. Pardoe: The last White Paper on public expenditure published earlier this year may have been made irrelevant as a result of inflation and other matters even before the date of publication. That is no reason for saying that no debate at all should take place on the elements of public expenditure. The Supplementary Estimates amount to £3 billion. I do not make any point about that. It is a large sum of money. Perhaps we ought to have done this using the Supply Day procedure which was devised to give the House a method of exercising its control over the expenditure of the Executive. It is not being used for that purpose.
I wish to register my protest this afternoon, along with my colleagues, at the failure of this House to do its job in controlling the spending powers of the Executive. I understand that to do that I have to move a reduction in this sum of money by a nominal amount. If that is so I will propose that the amount be reduced by £1,000.

Mr. Speaker: Order. The hon. Member can vote against the motion if he wishes.

Mr. Pardoe: In that case, I give notice that I intend to vote against the motion.

Question put:—

The House divided: Ayes 234, Noes 59.

Division No. 16.]
AYES
[4.17 p.m.


Archer, Peter
Cant, R. B.
Doig, Peter


Ashley, Jack
Carter, Ray
Dormand, J. D.


Ashton, Joe
Cartwright, John
Douglas-Mann, Bruce


Atkins, Ronald (Preston N)
Castle, Rt Hon Barbara
Duffy, A. E. P.


Atkinson, Norman
Clemitson, Ivor
Dunn, James A.


Bagier, Gordon A. T.
Cocks, Michael (Bristol S)
Dunnett, Jack


Bates, Alf
Cohen, Stanley
Eadie, Alex


Bean, R. E.
Coleman, Donald
Edge, Geoff


Bennett, Andrew (Stockport N)
Colquhoun, Mrs Maureen
Edwards, Robert (Wolv SE)


Bidwell, Sydney
Conlan, Bernard
Ellis, John (Brigg &amp; Scun)


Bishop, E. S.
Cook, Robin F. (Edin C)
English, Michael


Blenkinsop, Arthur
Corbett, Robin
Ennals, David


Boardman, H.
Cox, Thomas (Tooting)
Evans, Fred (Caerphilly)


Booth, Albert
Craigen, J. M. (Maryhill)
Evans, Ioan (Aberdare)


Bottomley, Rt Hon Arthur
Crawshaw, Richard
Ewing, Harry (Stirling)


Boyden, James (Bish Auck)
Cryer, Bob
Faulds, Andrew


Bradley, Tom
Cunningham, G. (Islington S)
Fernyhough, Rt Hon E.


Bray, Dr Jeremy
Cunningham, Dr J. (Whiteh)
Fitch, Alan (Wigan)


Brown, Hugh D. (Provan)
Davidson, Arthur
Flannery, Martin


Brown, Robert C. (Newcastle W)
Davies, Bryan (Enfield N)
Fletcher, Ted (Darlington)


Buchan, Norman
Davies, Ifor (Gower)
Foot, Rt Hon Michael


Buchanan, Richard
Davis, Clinton (Hackney C)
Ford, Ben


Callaghan, Jim (Middleton &amp; P)
Dean, Joseph (Leeds West)
Forrester, John


Campbell, Ian
Delargy, Hugh
Garrett, John (Norwich S)


Canavan, Dennis
Dempsey, James
Garrett, W. E. (Wallsend)




George, Bruce
McGuire, Michael (Ince)
Short, Mrs Renée (Wolv NE)


Ginsburg, David
Mackenzie, Gregor
Silkin, Rt Hon S. C. (Dulwich)


Golding, John
Mackintosh, John P.
Sillars, James


Gould, Bryan
McMillan, Tom (Glasgow C)
Silverman, Julius


Gourlay, Harry
McNamara, Kevin
Skinner, Dennis


Graham, Ted
Madden, Max
Small, William


Grant, George (Morpeth)
Magee, Bryan
Smith, John (N Lanarkshire)


Grocott, Bruce
Mallalieu, J. P. W.
Snaps, Peter


Hamilton, James (Bothwell)
Marquand, David
Spearing, Nigel


Hardy, Peter
Marshall, Dr Edmund (Goole)
Spriggs, Leslie


Harper, Joseph
Marshall, Jim (Leicester S)
Stallard, A. W.


Harrison, Walter (Wakefield)
Mason, Rt Hon Roy
Stonehouse, Rt Hon John


Hart, Rt Hon Judith
Maynard, Miss Joan
Stott, Roger


Hatton, Frank
Meacher, Michael
Strang, Gavin


Hayman, Mrs Helene
Mellish, Rt Hon Robert
Strauss, Rt Hon G. R.


Heffer, Eric S.
Mendelson, John
Summerskill, Hon Dr Shirley


Hooley, Frank
Millan, Bruce
Swain, Thomas


Horam, John
Miller, Mrs Millie (Ilford N)
Taylor, Mrs Ann (Bolton W)


Hoyle, Doug (Nelson)
Molloy, William
Thomas, Jeffrey (Abertillery)


Huckfield, Les
Moonman, Eric
Thomas, Mike (Newcastle E)


Hughes, Rt Hon C. (Anglesey)
Morris, Charles R. (Openshaw)
Thomas, Ron (Bristol NW)


Hughes, Robert (Aberdeen N)
Newens, Stanley
Thorne, Stan (Preston South)


Hughes, Roy (Newport)
Noble, Mike
Tierney, Sydney


Hunter, Adam
O'Halloran, Michael
Tinn, James


Irving, Rt Hon S. (Dartford)
O'Malley, Rt Hon Brian
Tomlinson, John


Janner, Greville
Orbach, Maurice
Tomney, Frank


Jay, Rt Hon Douglas
Orme, Rt Hon Stanley
Tuck, Raphael


Jeger, Mrs Lena
Ovenden, John
Varley, Rt Hon Eric G.


Jenkins, Hugh (Putney)
Palmer, Arthur
Wainwright, Edwin (Dearne V)


Jenkins, Rt Hon Roy (Stechford)
Park, George
Walker, Harold (Doncaster)


Johnson, James (Hull West)
Parker, John
Walker, Terry (Kingswood)


Johnson, Walter (Derby S)
Parry, Robert
Ward, Michael


Jones, Alec (Rhondda)
Pavitt, Laurie
Watkins, David


Jones, Dan (Burnley)
Pendry, Tom
Weetch, Ken


Kaufman, Gerald
Perry, Ernest
Wellbeloved, James


Kelley, Richard
Prentice, Rt Hon Reg
White, Frank R. (Bury)


Kerr, Russell
Price, C. (Lewisham W)
White, James (Pollok)


Kilroy-Silk, Robert
Price, William (Rugby)
Whitehead, Phillip


Kinnock, Neil
Radice, Giles
Whitlock, William


Lambie, David
Richardson, Miss Jo
Willey, Rt Hon Frederick


Lamborn, Harry
Roberts, Albert (Normanton)
Williams, Alan (Swansea W)


Lamond, James
Roberts, Gwilym (Cannock)
Williams, Alan Lee (Hornch'ch)


Latham, Arthur (Paddington)
Robertson, John (Paisley)
Williams, Rt Hon Shirley (Hertford)


Lee, John
Roderick, Caerwyn
Wilson, Alexander (Hamilton)


Lestor, Miss Joan (Eton &amp; Slough)
Rodgers, George (Chorley)
Wilson, Rt Hon H. (Huyton)


Lever, Rt Hon Harold
Rooker, J. W.
Wilson, William (Coventry SE)


Lewis, Arthur (Newham N)
Ross, Rt Hon W. (Kilmarnock)
Wise, Mrs Audrey


Lewis, Ron (Carlisle)
Sandelson, Neville
Woodall, Alec


Lipton, Marcus
Sedgemore, Brian
Woof, Robert


Litterick, Tom
Selby, Harry
Young, David (Bolton E)


Luard, Evan
Shaw, Arnold (Ilford South)



Lyons, Edward (Bradford W)
Sheldon, Robert (Ashton-u-Lyne)
TELLERS FOR THE AYES:


McCartney, Hugh
Shore, Rt Hon Peter
Miss Margaret Jackson and


McElhone, Frank
Short, Rt Hon E. (Newcastle C)
Mr David Stoddart.


MacFarquhar, Roderick






NOES


Biffen, John
Johnston, Russell (Inverness)
Ridley, Hon Nicholas


Body, Richard
Jones, Arthur (Daventry)
Ross, Stephen (Isle of Wight)


Bottomley, Peter
Kershaw, Anthony
Rost, Peter (SE Derbyshire)


Boyson, Dr Rhodes (Brent)
Kilfedder, James
Smith, Dudley (Warwick)


Braine, Sir Bernard
Knight, Mrs Jill
Spence, John


Brotherton, Michael
Langford-Holt, Sir John
Stewart, Donald (Western Isles)


Clark, Alan (Plymouth, Sutton)
Latham, Michael (Melton)
Tebbit, Norman


Cormack, Patrick
Lawrence, Ivan
Thompson, George


Crawford, Douglas
Lawson, Nigel
Thorpe, Rt Hon Jeremy (N Devon)


Critchley, Julian
Macfarlane, Neil
Wainwright, Richard (Colne V)


Eden, Rt Hon Sir John
MacGregor, John
Warren, Kenneth


Evans, Gwynfor (Carmarthen)
Maxwell-Hyslop, Robin
Watt, Hamish


Fletcher, Alex (Edinburgh N)
Mayhew, Patrick
Welsh, Andrew


Gow, Ian (Eastbourne)
Meyer, Sir Anthony
Wigley, Dafydd


Grimond, Rt Hon J.
Miller, Hal (Bromsgrove)
Wilson, Gordon (Dundee E)


Grylls, Michael
Miscampbell, Norman
Winterton, Nicholas


Hastings, Stephen
Mitchell, David (Easingstoke)
Young, Sir G. (Ealing, Acton)


Hawkins, Paul
Mudd, David



Hicks, Robert
Pardoe, John
TELLERS FOR THE NOES:


Howells, Geraint (Cardigan)
Penhaligon, David
Mr. A. J. Beith and


Jessel, Toby
Price, David (Eastleigh)
Mr. Cyril Smith.

Question accordingly agreed to.

Resolved,
That a sum, not exceeding £11,704,621,000, be granted to Her Majesty out of the Consolidated Fund, on account, for or towards defraying the charges for Civil Services for the year ending on 31st March 1977, as set out in House of Commons Paper No. 30.

Orders of the Day — DEFENCE SUPPLEMENTARY ESTIMATES, 1975ȓ76

Resolved,
That a further Supplementary sum, not exceeding £369,796,000, be granted to Her Majesty out of the Consolidated Fund to defray the charges which will come in course of payment during the year ending on 31st March 1976 for expenditure on Defence Services, as set out in House of Commons Paper. No. 27.

Orders of the Day — CIVIL SUPPLEMENTARY ESTIMATES, 1975–76

Motion made, and Question proposed,
That a further Supplementary sum, not exceeding £2,790,089,000, be granted to Her Majesty out of the Consolidated Fund to defray the charges which will come in course of payment during the year ending on 31st March 1976 for expenditure on Civil Services, as set out in House of Commons Paper No. 28.—[Mr. Robert Sheldon.]

4.26 p.m.

Mr. Nicholas Ridley: It is right, before leaving this Supplementary Estimate, that the House should be told how sums in excess of £3 billion have been incurred over and above the Estimates put before the House in the Budget as recently as last April. Will the Government not give us an explanation? This sum amounts to £60 per head of population above that which was originally forecast. We should not allow the Government to escape with a forecasting error of that magnitude without questions being asked and answers being given.
It is not right for the House to leave the Supplementary Estimates and to pass on to debate something else on all occasions. Sometimes it might be right, but clearly the only way in which this House can regain control of the expenditure of this profligate Government is by questioning the spending of these very large sums of public money. We have the opportunity at the time of the Budget, and sometimes during public expenditure debates, to question Government spending

as a whole, but when the Government incur £3 billion more expenditure than their already bloated spending forecast in the Budget, the House is entitled to an explanation.
The Secretary of State for Employment has accused some of his colleagues of economic illiteracy. Perhaps we can have a little more economic literacy about how this situation has arisen. The Government would do well to answer now why they have overspent to this absurd degree. If they were contrite and apologised, told us the reasons for it and promised to do better next year, I am sure the House would be happy to move on to the next business, which I recognise is important. But it is wrong that sums exceeding the Estimates to that extent should be allowed to go through on the nod and without explanation. I therefore ask the Government at least to do us the courtesy of apologising for their slipshod housekeeping before we go on to allow them to spend another £162·5 million.

4.31 p.m.

Mr. George Cunningham: I know that the House is anxious to get on to the next business and I shall therefore be brief. The House would not get into this situation if it insisted that its Select Committee on Expenditure and the sub-committees did the job of vetting the expenditure proposals in the Estimates as they should. Therein lies the proper method of giving the House adequate scrutiny over Government expenditure which manifestly at present does not exist.

4.32 p.m.

Sir Geoffrey Howe: I wish to underline my hon. Friend's point about the importance which the Government should attach to the presentation of huge Supplementary Estimates of this kind. It is quite improper for these procedures to take place when the Government are unwilling to tell the House what their current expected borrowing requirement for the year is. It is also wrong when the Government fail to make time available for a debate on this year's expenditure White Paper and when we have no assurance of early publication of next year's White Paper.
I hope that the House will fully appreciate the extent to which one-off decisions of the kind which can so easily be taken


in the context of any particular issue are the very decisions which contribute to expanding inflation and borrowing requirement of this kind. The next debate will give an important example of how the House should get this gross overspending under control.

4.33 p.m.

Mr. Patrick Cormack: It is outrageous that when a matter of this sort is being discussed not a single person rises from the Government Front Bench with an explanation. It should go on record that this profligate expenditure is being sanctioned without a Minister getting up to defend it.

4.34 p.m.

Mr. John Pardoe: I am delighted that this procedure has flushed the Opposition from their lair. We shall look to them for support in the future when we attempt to control public expenditure.

Mr. Speaker: The Question is,
That a further Supplementary sum, not exceeding £2,790,089,000, be granted to Her Majesty out of the Consolidated Fund to defray the charges which will come in course of payment during the year ending in 31st March 1976 for expenditure on Civil Services, as set out in House of Commons Paper No. 28.

As many as are of that opinion say "Aye". To the contrary "No". I think the Ayes have it. The Ayes have it. Mr. Sheldon.

Mr. Cormack: No!

Mr. John Biffen: No!

Mr. Speaker: Order. I have collected the voices. The Ayes have it.

Question agreed to.

Bill ordered to be brought in upon the foregoing Resolutions relating to Defence Estimates, 1976–77 (Vote on Account), Civil Estimates, 1976–77 (Vote on Account), Defence Supplementary Estimates, 1975–76 and Civil Supplementary Estimates, 1975–76 by the Chairman of Ways and Means, the Chancellor of the Exchequer, Mr. Edmund Dell, Mr. Joel Barnett, Mr. Robert Sheldon and Mr. Denzil Davies.

Orders of the Day — CONSOLIDATED FUND

Mr. Robert Sheldon accordingly presented a Bill to apply certain sums out of the Consolidated Fund to the service of the years ending on 31st March 1976 and 1977; and the same was read the First time; and ordered to be read a Second time tomorrow and to be printed. [Bill 16.]

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Coleman.]

Orders of the Day — MOTOR VEHICLE INDUSTRY

4.36 p.m.

The Secretary of State for Industry (Mr. Eric G. Varley): This must be the first debate on the motor industry in this House for 30 years in which there will be no speech by my former hon. Friend the Member for Coventry, North-West (Mr. Edelman). Throughout his parliamentary life Maurice Edelman fought for the interests of his many constituents who work in the Coventry car factories, and his voice in this Chamber will be sorely missed today. But it is typical of the man as we knew him that he has still found a way, through his posthumous letter in The Times today, of making known his characteristically trenchant views.
Like my other hon. Friends who sit for constituencies in Coventry and the surrounding area, and like my hon. Friends who sit for other areas of England and Scotland where there are large concentrations of car workers, Maurice Edelman would rightly have drawn attention to the employment aspects of any decision about this industry. It is certainly true that, while we have very sadly almost come to take as read the employment difficulties of Scotland, serious unemployment in the West Midlands has only recently come to be a factor that looms large.
It would be idle to pretend that jobs were not the key issue in the prolonged and, indeed, agonised considerations that we gave to the Chrysler problem over the period of seven weeks since Mr. Riccardo gave his Press conference in Detroit at the end of October. What kind of a Labour Government would we be if 60,000 jobs did not matter? But jobs were not the only issue. On the one hand, it could have been argued that it made sense to let this company go under. since its long-term future was in serious doubt, since it had failed for more than five years to produce any new models in this country, and since, despite assurances given eight years ago, its parent company seemed to have no strong commitment to it.
Furthermore, it is posible to point to the Report on the Future of the British Car Industry by the Central Policy Review Staff, which has been published today and which indicates over-capacity in British motor vehicle production, and to say that to let Chrysler go was a golden opportunity of ridding ourselves of that over-capacity. The arguments to the contrary contended that the best way to deal with this over-capacity was through general slimming down, rather than through amputation of one limb.
There were further arguments for retaining a substantial Chrysler presence in this country. There were the particular arguments about the Iranian contract being a benefit to our balance of payments and an important symbol to overseas customers of our determination to fulfil large-scale orders. There was the general argument about the danger to this country's industrial future if our manufacturing capability were steadily eroded. It was these which prevailed.
There were other arguments which led to the decision that this company should continue to be a Chrysler company locked into the Chrysler world-wide distribution network, producing new Chrysler-designed models and benefiting from that company's experience and know-how. I assure my hon. Friends, who I know are concerned about this, that a complete or partial merger with British Leyland was considered by us carefully and in detail, and was found to be impracticable. The alternative, a wholly or partly State-owned Chrysler competing with the State-owned British Leyland, was clearly out of the question.
So we now move forward on this new basis, having taken serious into account the formidable body of evidence and information assembled in three key documents. The first of these is the Ryder Report on British Leyland. The second is the Report of the Trade and Industry Sub-Committee.
I apologise to the House and to my hon. Friend the Member for Sheffield, Attercliffe (Mr. Duffy) who is Chairman of that Committee, for the fact that it has not been possible to publish the Government's reply to the Report in time for this debate. [HON. MEMBERS: "Why not?"] I shall tell the House why not if it will be patient


for a moment or two. The House will appreciate the preoccupation, within the Government and my Department, with the Chrysler situation. Until we had reached decisions about Chrysler we were prevented from giving final consideration to the Select Committee's Report and to giving a response to that Report—

Mr. Patrick Cormack: That is the wrong way round.

Mr. Varley: I assure the House that the White Paper will be published, and in due course we shall be more than ready to debate it.
The third document is, of course, the Report of the Central Policy Review Staff, which we have published in fulfilment of our undertaking. Earlier this year, when the Government were presented with the difficulties of British Leyland they asked the Central Policy Review Staff to undertake a study of the long-term prospects for the British car industry. That Report has been published today by Her Majesty's Stationery Office and copies have been placed in the Library and in the Vote Office. As is made clear in the Report, the Government are not committed to the acceptance of all the detailed facts and arguments there set out.

Mr. John Stanley: Will the Secretary of State tell the House quite candidly why this Report, which has been in existence for many months, saw the light of day only at 11 a.m. today?

Mr. Varley: The hon. Gentleman is not being fair to the Government. This is only the second Report that has been published since the Central Policy Review Staff was set up. The last Report was published when I was Secretary of State for Energy, and concerned energy conservation. We have now published this Report. I would take this criticism seriously if the previous Conservative Government had been more forthcoming with CPRS Reports. However, the Report has been made available. I am sure that the hon. Gentleman will have time to study its conclusions, and he may well be able to catch your eye, Mr. Deputy Speaker, in the debate that we shall have tomorrow on the motion to implement the arrangements that we have

made concerning Chrysler. I do not believe that the House has missed out all that much.

Mr. Cormack: What sort of confidence can the right hon. Gentleman expect this House to have in him and his judgment when he totally ignores a Report produced by a Select Committee of this House? That Report should have been considered first and the Chrysler one second.

Mr. Varley: I do not agree. The Government could not respond to the Report of the Select Committee until they had made up their mind exactly what to do about the Chrysler situation. In view of what we have announced today it will be possible to give a considered response to the Report of the Select Committee, taking into account the decision that we have made.

Mr. Michael Heseltine: It is quite clear that in November the final printed version of the CPRS Report was available to the Government. Why did it take until 11 o'clock on the day of this major debate before the House was given a chance to see it?

Mr. Varley: It was always the intention that the Report should be available. It is arguable and debatable whether it should have been made available earlier than today. However, my right hon. Friend the Prime Minister made it plain, and gave an undertaking to the House some weeks ago, that it would be made available for this debate. It is disingenuous of the hon. Member for Henley (Mr. Heseltine) to suggest that he will not have sufficient time to consider the CPRS Report for the further debate that we shall have on the Chrysler situation in this House tomorrow.
I repeat that the CPRS Report does not commit the Government. That is made clear in the fly-cover to the Report as presented today. However, I want to make it absolutely plain that we accept some of the arguments contained in it. The House will want to know the relationship between those arguments and the future position of Chrysler UK.
The CPRS Report describes the likelihood that the European car assembly industry, which faces considerable overcapacity at the present time, will remain in a fiercely competitive situation for the coming decade.

Mr. F. A. Burden: The Government should assess the total capacity of car firms already in this country and the likely requirement for sales in this country, Europe and elsewhere in 1978–79. Will the right hon. Gentleman give an undertaking that consideration has been given to this and that the slimming that has taken place in Chrysler as a result of this action will result in a situation in which we can look forward to selling the production of our car factories?

Mr. Varley: I disagree very much. The hon. Gentleman has said that it depends on the success of the slimming operation and on the company's achieving longterm viability. The arrangement that we have made, as I made plain in the statement that I made earlier and in answer to questions earlier today, is the Government's objective.
It is essential that we improve labour productivity within the motor car industry. There must be better relationships on the shop floor, less constant interruptions, and smoother production. That is our aim and that is what we shall repeat again and again when we talk to the work force of Chrysler UK.
The arguments deployed in the CPRS Report will be influential in shaping policy towards the motor vehicle industry, but the way to do this is not to allow a complete sector of the industry to collapse without due regard to economic, balance of payments and employment implications. The Government's plan involves substantial improvements in productivity, so it is absolutely necessary that there will be some redundancies. All this will be in harmony with the changes called for in the CPRS Report.

Mr. Jeremy Thorpe: The right hon. Gentleman is right to call attention to the need for better industrial relations and increased productivity. In so far as Lord Ryder has made this a condition for further money for Leyland, do the Government intend to make it equally a condition for further money for Chrysler?

Mr. Varley: Certainly we shall monitor the stages of financial assistance that we are making available to the Chrysler Corporation. We could do this through

the Government directors, whom we shall appoint to the Chrysler UK Board. It is conditional in the same way on improvements and the acceptance by the work force of that company.
The CPRS Report emphasises the importance of economies of scale, the need for capital investment in new models and for some modernisation of plant. Chrysler UK is obviously very much too small to operate viably on its own. It could exist efficiently only as part of a much larger company. The accord reached with the Chrysler Corporation not only recognises this but lays down in great detail the extent to which Chrysler UK will form part of Chrysler worldwide. It specifies the models that will be produced in Britain—models whose designs and toolings costs will have to be spread over production in a number of countries.
Finally, and most importantly, the CPRS Report emphasises the need to improve labour productivity in British car plants—all British car plants, and not only Chrysler UK. The agreement with Chrysler recognises that this is essential to the viability of Chrysler UK.
A great deal of effort will be put into improving industrial relations, productivity, quality and reliability of delivery. This effort will be at shop floor and plant level, with improved worker participation, and at national level between national unions, management and Government by means of planning agreements. Planning agreements will cover targets to increase productivity. Basic to the achievement of these targets will be, as the CPRS Report emphasises, a change in outlook between management and labour on the shop floor. This battle for a change in outlook is the battle for the future of the British volume car industry.

Mr. Tom Litterick: Is the House to understand—this is very much related to the remarks that my right hon. Friend has just made about the co-operation of the work force, and so on—that no consideration has so far been given to the comprehensive, incisive and sophisticated report which was written and delivered by the workers of Chrysler?

Mr. Varley: As my hon. Friend will recall. I received a copy of that report


from representatives of the workers direct in a Committee Room of this House. The report has been considered, and we have taken into account the views expressed to us. Within the next 24 hours steps will be taken to meet some of the representatives of the work force from the Chrysler plants so that we can go over the situation with them and explain precisely our plans and our hopes for the company.
However, the battle has to be won, and if it is a battle for Chrysler it is also a battle for British Leyland. Money cannot be invested year after year in new models and new plant if productivity fails to improve.
The three Reports have a good deal in common and cover a great deal of ground. Their diagnosis of the industry's problems are strikingly similar. Although there is divergence—sometimes a sharp divergence—on some of the remedies to be applied, all three Reports are agreed that there is a future for the British industry if decisive steps are taken now. There are striking and even alarming comparisons of productivity between the British car worker and his continental counterpart.

Mr. William Molloy: One that point, will my right hon. Friend tell the House whether he is contemplating having discussions with representatives of the trade unions involved to see whether they would agree to supplying a nominee to be one of the new Government directors?

Mr. Varley: My hon. Friend will recall that in the statement and the questions that I answered earlier I pointed out that there may well be a possibility that Chrysler United Kingdom will resuscitate the worker participation plans that it put before the work force earlier in the year. Certainly we would want to enter into discussions with them, and it may well be possible to have direct worker representation on the board. I do not want to go firm on this at this stage. I have to have discussions with the workers and we need to discuss the matter further with Chrysler UK.
There is no single reason for the malaise of the British car industry. Some blame can be attached to all the parties concerned. Some blame can certainly be

attached to Governments, to management, to work forces and to the unions.

Mr. John Biffen: Will the right hon. Gentleman give way?

Mr. Varley: This is the last time I shall give way.

Mr. Biffen: I am very grateful. Before the right hon. Gentleman leaves the subject of the relationship between Chrysler and British Leyland, will he indicate to the House whether, during the last few days, whilst the whole rescue operation for Chrysler was being discussed, he sought and secured the views of Lord Ryder? If so, what were they?

Mr. Varley: Lord Ryder was consulted about the general situation in relation to the National Enterprise Board and the question whether the NEB could be involved. We were told by Lord Ryder—on behalf, I think, of the NEB—that the NEB was committed wholly and completely to the success of British Leyland. I think that he was right and that that decision was right. But he was consulted. I think that is the answer to the hon. Gentleman's question.

Mr. Biffen: The right hon. Gentleman has not quite understood my question. It was not about Lord Ryder's views on Chrysler UK being incorporated into British Leyland under the auspices of the NEB. My question was about Lord Ryder's views on the decision that the Government have taken themselves in respect of Chrysler UK.

Mr. Varley: The consultation with Lord Ryder took place many weeks ago—I think it was as many as four weeks ago—when we were wrestling with this problem and varying schemes. But the decision that we have taken is a Government decision. When we reached the conclusion that we could have an agreement with the Chrysler Corporation, we did not go to Lord Ryder and say "Do you approve?" That would not have been proper, and I do not think that the House would expect that situation to exist.

Mr. James Wellbeloved: Will my right hon. Friend indicate whether the motion that is to be tabled will contain positive proposals to secure this massive injection of public


funds as a charge against the assets of Chrysler UK? Is he aware that that sort of move would greatly encourage hon. Members on the Government side of the House to support him? Is he aware that it would also have two other benefits? First, it would minimise the opportunities for the Chrysler parent company to hold a pistol to the head of the Government in one or two years' time; secondly, it would have the great merit of conforming to the Labour Party manifesto.

Mr. Varley: As far as I can recall, the motion that will be tabled later today will set out the contingent liability. It will be the agreement that we have reached with the Chrysler Corporation about the way in which the project is funded. The loan that is received from the Government for the capital and model development programme will be secured against the assets of the Chrysler Corporation and not the assets of Chrysler UK. I think that the main question that my hon. Friend wanted to ask—which I have answered—was: will the Chrysler Corporation guarantee any of the loans that it will be receiving? The answer is a definite "Yes, it will". But it will not be spelled out precisely in that way in the motion that will, I think, come before the House tomorrow night.
I was discussing the question of the problems of the British motor car industry. From time to time, perhaps, all parties are blamed. Successive Governments are blamed, as are managements, work forces and the unions. Whatever the reasons, I think that this debate ought to be regarded as a new starting point.
I have already—both in my statement and at the beginning of this speech—referred to our proposals for Chrysler, and my right hon. Friend the Secretary of State for Scotland, who will be winding up the debate, will be adding more information on Chrysler. But this debate provides a useful opportunity for the House to review development in British Leyland since my right hon. Friend the Prime Minister made his statement of Government policy on 24th April and to survey the size of the task ahead.
Without doubt, we are all better equipped to understand the nature of the task ahead for British Leyland—as for

the motor car industry as a whole—with the help of the study conducted by the CPRS. In approaching the subject of the performance of and the outlook for British Leyland, the House will, I am sure, recognise that it is not just in the Government's interest—or the interests of the National Enterprise Board or those who work there—that the company should succeed. It is a matter of vital interest to everybody who represents car workers and to every hon. Member of this House.
A common thread to the Reports I have referred to earlier that have been published this year is the central significance of the health of our motor vehicle industry to our economy. First, I should like to remind the House of some of the progress that has been achieved this year in British Leyland since the Ryder Report was published. To begin with, the necessary mechanics of financial reconstruction have gone ahead smoothly. The Scheme of Arrangement was approved by an overwhelming majority of shareholders voting.
Following this, in early October the Government subscribed £200 million of new equity through a rights issue, under the British Leyland Act. At the same time, the interim arrangements approved by the House for guaranteeing the company's larger than normal overdrafts to a limit of £100 million were extinguished as it had always intended that they would be. This meant, of course, that a large part of the new equity was immediately required for the repayment of some of British Leyland's borrowings over previous months.
Early in October, a new Chairman—Professor Sir Ronald Edwards—and four non-executive directors were appointed to the board of the company, including a member of the Ryder team. British Leyland is now two and a half months into a new financial year, under the direction of its new board. The internal reorganisation of the company along the lines recommended in the Ryder Report was begun within a matter of days after the Report's publication.
The complexities and the full significance of these changes are inevitably not immediately apparent to those who are not closely concerned with the affairs of the company, but I can assure the House that this has been a very considerable


task and, I believe, its swift accomplishment has provided a sound organisational foundation on which to build the company's future strategy.
The House will not need reminding that 1975 has presented the industry with some of the most difficult trading conditions experienced for many years. During this period it has been necessary to adjust volumes of production as closely as possible to the very different demand conditions from those of a few years ago. During this period British Leyland has continued the necessary process of bringing about a planned and orderly reduction in manpower levels.
Since January 1974 manpower has had to be reduced by 28,500. A large proportion of that reduction has taken place in the period since the Ryder Report was published. Although a reduction of this kind in the number of jobs provided by the company can never rightly be regarded as an achievement in itself, we must recognise that it has been made necessary by the trading conditions and that it has been a precondition to maintaining employment for the remaining 154,000 employees.
In the market place British Leyland has achieved an average share of 31·1 per cent. of the domestic car market during the first 11 months of this year. That includes several months of unusually high achievement as well as the relatively disappointing figures of the past two months, when low levels of stock have severely affected the company's position.
The company has introduced two successful new models and has made improvements to most of the other models in its range. At a time of increasing competition it has been an innovator in new forms of guarantee for the consumer which have been publicly welcomed by the Director General of the Office for Fair Trading.
On industrial relations there have been serious problems and these will take time to resolve. As the CPRS Report has so clearly stated, what is needed in the United Kingdom motor vehicle industry is a fundamental change of attitude amongst all those employed at all levels. The Ryder Report also saw the need for such a change, and this recognition

was at the root of the team's recommendations for joint councils and joint committees.

Mr. Douglas Hurd: Is the right hon. Gentleman aware that the account which he has just given of progress in British Leyland is in sharp contrast to the much more incisive and depressing account given last week by Mr. Whittaker to the workforce?

Mr. Varley: I do not want to give the impression that we are satisfied with the progress that has been made in British Leyland. The point I am making is that progress has been made. It would be as well for the House to recognise that there has been progress. That does not mean that much more does not have to be done. Indeed, much more has to be accomplished. The loss of 28,000 jobs for the year is an indication that the problems of British Leyland are being faced and that the organisation is getting down to a more productive basis. It is clear that we need changes, including a change of attitude in British Leyland. There will be friction and problems in bringing them about.
The management and unions at British Leyland have been involved in lengthy and complex negotiations in the application of industrial democracy. The first of the meetings of the new joint management committees at plant level have already taken place, and I understand that it is hoped that an election to the top tier of the new system will take place in the next few months.
Although negotiations have at times been difficult, the new machinery has a great potential for a better future. I am sure that this is the way ahead. I am hopeful that amid all the obvious difficulties experienced it may be proved that valuable pioneering work has been done at British Leyland, providing experience which can be built upon.
During this year British Leyland has continued to account for over half of the United Kingdom's export of complete cars. In particular, exports to the United States of America have flourished. In the financial year up to October, they were running at a level of 36 per cent. above the previous year. There have been real achievements in the first few months.
But I repeat that it is no good being complacent. It would be foolish to pretend that there is not still a long way to go. [HON. MEMBERS: "Hear, hear."] Those who cheer will agree that we have had the courage to publish the CPRS Report today. The Report has made it doubly clear that we are prepared to ensure that we make a success of the British motor car industry. There are difficult times ahead for British Leyland and the first few months must in many respects be regarded as merely a preliminary stage.
The Ryder Report stressed that there are certain minimum time scales involved in bringing about new capital investment, and that it must be a matter of years before the fruits of this investment can be seen in terms of performance and profit. Against this perspective there is no doubt that there is much scope for better performance. The Government have made it clear that future tranches of money from public funds will be conditional upon improvements in performance, starting with the current year.
Of course, the NEB and my Department will be maintaining a close watch on these developments throughout the course of the year. I repeat that there needs to be a great improvement. The principle of making future injections of finance conditional upon progress in performance and in the equally important area of productivity remains an essential feature of our policy towards British Leyland.

Mr. Norman Tebbit: rose—

Mr. Varley: No, I shall not give way again. I have given way on a great many occasions. I feel that the House wants to get on with the debate.
These are all matters which we can pursue when the House considers the Report of the Trade and Industry Sub-Committee and the Government's response to it.

Mr. Tebbit: When?

Mr. Varley: Bearing in mind the statement I made earlier today and the speech that I am now making, hon. Members will not wish me to delay matters any

further by giving way to the hon. Gentleman or to any other hon. Member.
I must make it clear that we consider the problems of Chrysler and British Leyland, and the valuable contribution to employment, production and exports by Ford and Vauxhall, not merely against the background of what some may believe to be factors and difficulties special to this country. The fact is that the motor vehicle industry world-wide is having a bad time. The British industry is particularly hard hit.
For the past 20 years or so the demand for vehicles generally, and passenger cars in particular, has shown an increase fluctuating from year to year but with a steadily rising trend. There have been, however, certain weaknesses in the industry and events over the past few years have brought them into sharp focus. The demand for cars turned down sharply. Some household names in the vehicle industry found themselves in difficulty. Over the next few years only the lean, tough and competitive in the motor industry can hope to survive.
There will be difficult adjustments to be made. Excess capacity can no longer be carried. I hope that amid all the traumatic events of the past few months and weeks, right from the start of the deep troubles into which British Leyland fell, we shall not decry the positive contribution to our economy made by our motor industry.
In this country we take too much pleasure in picking out all the worst features in our industrial scene. As Secretary of State for Industry, in the past six months I have come against my share of them. We should draw attention to our massive capabilities and skills and the magnificent success of some sectors of our industry. They come up against the best in the world and they compete with them. Our motor industry is an exporter of immense importance and vitality. The component sector emerges from the CPRS Report with flying colours.
The industry as a whole is well on the way to a positive balance of payments this year—taking fully into account our imports of foreign cars and trucks—of about £1,500 million. That is an immense contribution to our living standards and fully justifies the detailed


scrutiny and concern of which the industry is a focus. In never relaxing that scrutiny and concern, let us pay tribute to the achievements as well.
The last seven weeks have been in some respects the most difficult of my life. The thought of 25,000 workers, and probably as many indirectly employed in the motor vehicle industry, becoming unemployed was daunting and haunted me day and night. I hope that hon. Members on all sides of the House will look at these problems seriously and will examine the statement and the Order that we intend to lay, and will support us in the Lobby tonight.

5.11 p.m.

Mr. Michael Heseltine: I wish to associate myself and my right hon. Friends with the opening remarks of the Secretary of State for Industry about Maurice Edelman. I campaigned against Mr. Edelman in 1964, and it was then perhaps for the first time that I came to understand the comradeship that underlies many of the associations across the Floor of the House. Maurice Edelman will be sadly missed, and it is particularly tragic that this debate should take place so soon after his untimely death.
This is the third debate in the past month in which the House has debated some aspects of the Government's industrial policy. This afternoon it is the motor industry. But the underlying themes are inseparable and run through all three debates. Year by year, industry by industry, we have failed to achieve the performance that has characterised most of our more successful competitors. In Britain there has been a unique failure to face the consequences of changed economic circumstances that have diminished our presence in overseas markets and made us less able to resist the penetration of imports into our market. The remedies that need to be applied are unpalatable. They will be the cause of social and economic disruption, and whichever Government are responsible for introducing them will require great courage.
The question is no longer one of choice but of timing. We shall either of our own will begin the battle to encourage change and adjustment or it will be forced upon us. In the short term we

have shown our preference to put off that day. Out-dated industries are subsidised, out-dated jargon is resurrected, and outmoded concepts are extended.
While other countries told their people the truth and gave leadership to cope with the major changes in the distribution of world economic power in 1973, the reality is that Labour, first in Opposition and now in Government, have plunged us into a self-deluding electoral device of the social contract to buy power for themselves in the short term, at the expense of the whole nation in the long term. When other nations have set their faces to the wind, we have lived on borrowed money and pushed our inflation up to 27 per cent.

Mr. Litterick: If what the right hon. Gentleman says is true, will he explain why the principal industrial nations in the northern hemisphere have higher unemployment rates than ours and have seen a greater increase in unemployment in comparison with the United Kingdom?

Mr. Heseltine: I shall deal with that point in detail later in my remarks.
Other nations underwent change, but we in Britain defied it on an escalating scale. First there were little examples—significant not in major terms but only in terms of the examples and headlines that they created. I refer to Meriden, Kirkby, and the Scottish Daily News. Then the more spectacular cases—such as Alfred Herbert, British Leyland, the conflict with Sir Monty Finniston of British Steel—dominated the headlines. The clamour behind them was always the same—namely the cry "We are protecting jobs."
How different it all looks now. In the United States of America unemployment is being reduced; in Germany the trends are levelling out; in France the figures are no higher they were six months ago. But in Britain the worst is yet to come and nobody would like to forecast whether 1½ million or 1¾ million jobs will finally prove to be the peak. What everybody agrees is that the peak will not come until another year has passed. The responsibility for that lies wholly with the leaders of the present Government.
Those who keep records of these events will know that the Labour Government,


after a much publicised period of introspection, realised what they had done and announced a change of strategy. The new industrial policy at Chequers and the attitudes adopted at that meeting are there for those who want to read them. The Secretary of State spoke about the situation a few days before the Chequers meeting. He said:
To improve our industrial performance, available resources should go to those industries and companies which have the soundest performance or the best prospects. This must be the first principle of Government aid to the private sector.
Now, a month later, comes Chrysler.
The Secretary of State's case is indefensible, and if I needed conviction of that his speech this afternoon proved it beyond my worst fears. He claims that the Government are saving jobs, creating a long-term viable company, helping our balance of payments and saving public expenditure. If those assertions were true we would support the Government. But we oppose the Government's plans because we refute the claims made for them by the right hon. Gentleman—[Interruption.] The Secretary of State for Scotland ought to talk about motives. He is the last one to come to this House to justify the expenditure of £162 million to defend his political base in Scotland. Today's announcement will prejudice job prospects in this country. It will not ensure a viable future for Chrysler United Kingdom. Indeed it will weaken our balance of payments and increase public expenditure.
It is right that we should debate these proposals put forward by the Government in the context of the motor industry as a whole. But what is totally indefensible is that in a major debate of which much advance notice has been given, the Government for many weeks and days have deliberately sought to withhold from the House the basic information that would have made this debate more meaningful and better informed. It is intolerable to have treated the Select Committee in that way. But what is beyond comprehension is that the CPRS Report, which was in the hands of Ministers weeks ago, should have been deliberately withheld until 11 o'clock on the morning of the debate that is to take place.
For the Secretary of State to say that he had the courage to publish the Report is to re-write history. A few weeks ago they believed that they were to allow Chrysler to go to the wall, and now the CPRS Report sustains their case for doing so. Therefore, they promised to publish the Report—but then, for reasons known to the world but apparently unknown to Labour Ministers, they lost their nerve. They were lumbered with the then commitment—a commitment apparently incapable of being withdrawn—to publish the CPRS Report since it would scuttle the case which they have put forward this afternoon. That is why they held back the Report till the last conceivable moment, first, so that the national Press would not be given access to it yesterday and, secondly, so that Members of this House would in practice not have an opportunity to read the Report before the debate. To call that courage is the most extraordinary travesty of language.
Anyone who has studied the Report, even in the four and a half hours allowed to us, will have learned why the Government were so anxious to hold it back. No doubt we shall come increasingly to rely on The Sunday Times in future. It published on Sunday, with total accuracy, details which the Secretary of State was unable to produce for the House until today.
The Report, together with the Select Committee's Report, are important. They are models of the sort of thing this House should be discussing. They talk about British industry as it is. No one escapes their analysis, least of all those of us in this House who must, in the last resort, bear the responsibility for a decade or more in which by our speeches, actions and omissions we have fostered a climate in which the problems set out in the Reports have grown steadily more acute. Whether on politicians, management or workers, the blame is spread thickly. In the name of sanity, our task should be to learn from what has happened and begin the process of correction.
But what do we see? The Secretary of State says that the CPRS Report concludes that the motor industry is having a bad year. I think we all knew that. That is not the point. The Report says the


industry will go on having bad years for the next decade and that this is not the industry in which to back winners, as is suggested in the Chequers strategy. We see international competition in motor manufacturing getting tougher every year, and there is massive spare world capacity. To make matters worse, Japan, Spain, Brazil, Korea and Iran are adding to that capacity. In Europe, manufacturers are operating at two-thirds of existing capacity, and even if they do not increase at all over the next decade it is unlikely that a level of demand will be reached that will be profitable at any time in that decade.
By any tests, all our manufacturers are the weakest examined in the Report. All British producers are among the weakest internationally by any standard, whether on the number of models produced in economic numbers, the number of models produced in the most important market segments, quality and after-sales reputation, price and delivery record, number and organisation of plans, return on capital and balance sheet strength, level and rate of improvement of output and productivity, which is probably actually negative over recent years, or in over-manning and output per man. This is the improbable background that led the Government to take the decision announced by the Secretary of State today. He did not try seriously to undermine the arguments in the Report, yet anyone who even skims through its pages will be led to the irrefutable conclusion that Chrysler does not have a long-term viable future because it cannot reach the scale of operation by which it can generate sufficient funds for investment—

The Chancellor of the Duchy of Lancaster (Mr. Harold Lever): Chrysler does not agree.

Mr. Heseltine: We shall consider Chrysler's position in a moment, but I would advise the right hon. Gentleman to take a detached view about the advice he is given from that quarter.
Let us look at the case on which the Secretary of State rests. It cannot be substantiated by the Report. He says that this measure will protect jobs. In reality it will destroy jobs because it merely delays the unemployment which must come at Chrysler. It ensures a consequential

widespread loss of jobs elsewhere. One of the causes of our present economic difficulties is the inability of hon. Members opposite to understand the relationship between these two factors, but the Secretary of State knows that what he is doing is preserving one set of unviable jobs at the expense of another set of productive jobs and that he is doing it for entirely political reasons.
Let us look at the implications of these proposals on the hitherto secure jobs at Ford. If Chrysler and British Leyland are to fight for their market share by using taxpayers' money to support the "Superdeal" concept, which leads to retaliation from Chrysler, who reduce prices by between £160 and £200 per car, what does that do to the prospects of Ford and Vauxhall who are still controlled by the disciplines of the market? It is not only at Ford that productive employment will be reduced. The repercussions will ripple throughout the economy.
Unless the Government are prepared to increase their massive borrowing requirement still further—and they have already said that their social programme will have to be cut rather than allow this to happen—the rescue operation for Chrysler will have to be financed by additional taxation or by further cuts in expenditure. Other producers must lose their markets and other workers must lose their jobs because Chrysler workers are believed to be crucial to the Government's electoral prospects in Scotland.
The Secretary of State claimed that paying the social security benefits involved in redundancy would be more expensive than the scheme to which the Government are committed, but that argument cannot be taken seriously because, in the last resort, it is an argument for everyone staying in his job for all time regardless of the economic case for his moving. It is nearly always cheaper in the very short term to subsidise unproductive jobs rather than to pay benefits to help the workers move. If the Government consistently fail to allow the redeployment of labour and assets when they are no longer being profitably employed, then what on earth was the revision of policies at Chequers all about?
Secure jobs can be provided only by an efficient allocation of resources. The


great merit of the Chequers strategy was that it appeared to recognise this. Just before the Chequers statement, the Chancellor of the Exchequer explained on television that a high degree of unemployment in the immediate future was inevitable, but he added that it would be very different in 1977 because then we would be seeing a real boom—it is always next year—and we would be reaping the first great harvest of the new industrial strategy. But the Government have now abandoned the new industrial strategy and have destroyed the employment prospects which were its major justification.
Let us place this redundancy issue in perspective. Under this Government, 37,000 men and women are joining the dole queues every month. A total of 28,000 workers have lost their jobs in British Leyland, and the Secretary of State for Industry must take the credit for that. In the steel industry, 40,000 workers have been told that they will have to go and the Secretary of State has told us that he is going to run down the aerospace industry. There are likely to be massive redundancies on the railways, and all over the private sector painful adjustments are having to be made.
In this situation the Government have selected probably 12,000 Chrysler workers, who are producing goods that people do not want to buy, for special treatment. They have been selected not because they have any economic significance which distinguishes them from the 1¼ million who, in terms of unemployment, are in just as despairing a situation as would be the 12,000, but because the Government, as in every previous crisis, have lost their nerve.

Mr. Lever: The right hon. Gentleman is dealing with different people.

Mr. Heseltine: We are dealing with 1¼ million people who are out of work and must have a reason to understand the hard re-alignment which they must make and cannot understand why 12,000 people who are no more economically significant than they are will be receiving £162 million of taxpayers' money while, for them, there is the dogma of nationalisation of the aerospace and shipbuilding industries, the restrictionism of the port schemeintroduced by the Government—

Mr. Litterick: What about the effects on unemployment?

Mr. Heseltine: It is a dangerous task for hon. Members opposite to lecture us about unemployment—[Interruption.]

Mr. Deputy Speaker (Mr. George Thomas): Order. We have been very orderly so far today.

Mr. Heseltine: I accept that the hon. Gentleman should lecture me on unemployment because he supports the Labour Party, which has more experience of creating it. When I came to the House I watched the level of unemployment rise year after year under the Labour Government in the 1960s. I was a member of a Government which—because it was appalled at the consequences of 1 million people being unemployed, largely as a result of the policies on which the previous Labour Government were defeated—regarded as the first priority the elimination of unemployment in the early 1970s. With all the consequences of trying to maintain the highest possible level of employment, I watched the Labour Front Bench encourage every dissident militant group in the country which sought to grab a prior position for itself and so produce higher levels of unemployment. I watched the social contract send United Kingdom unemployment to a level which is no longer equalled in Western Europe man for man. We have a year to go before we hit the 1¼ million, 1½ million or 1¾ million which will be the factual record of a Labour Government. In spite of all the cant and humbug we get from the Labour Benches, that is the reality.
Whenever it comes to a crisis, the Government lose their nerve. The Prime Minister might talk of a Dunkirk spirit, the Chancellor of the Exchequer might offer to trade in his medals. Even the Secretary of State for Industry has his wounded heroes. If only the Government would use less of the language of the trenches and more of the courage, we should at least start finding our way out of our deep-seated troubles.
Let us take the second argument that is produced by the Secretary of State for Industry. He argues that the balance of payments implications justify his actions. I totally refute that argument. Chrysler today holds 5 per cent. of the home


market. Even that figure will decline when the fleet buyers return to the market. Assuming that that market share came on offer tomorrow, it could be argued that foreign cars would capture the same proportion of it—34 per cent.—as they hold of the overall domestic market. So to the foreigners might go about one-third of the 5 per cent. of the domestic market that Chrysler holds. To deny the foreigners that prize of an extra per cent. of the domestic market, the Secretary of State for Industry justifies his proposals.
What the Secretary of State has forgotten is the impact of his proposals on the other United Kingdom manufacturers—on Ford, British Leyland and Vauxhall. Management and workers, when they read of our deliberations here, will find no conceivable incentive for them to act as they know, and as the CPRS Report confirms, they have no choice but to act.
They must act in two ways. First, they must eliminate the consequences in terms of imports that arise from the fact that one cannot buy Ford or British Leyland cars under a three-months' wait, because productivity is too low and industrial relations are too bad. Secondly, they have to achieve the higher export market which we desperately need. In saving that notional 1⅔ per cent. of the national home market, I cannot overstress to the Secretary of State for Industry that other motor manufacturers need only increase their exports by 3 per cent. to save what he fears to lose on the balance of payments. As the CPRS Report so devastatingly reveals, the ability to do that lies totally within the determination of the management and the work force here in Britain. There are no excuses save our own inadequate performance. By propping up Chrysler, the Secretary of State is providing one more reason to destroy the sense of urgency needed to achieve even that modest target. He is sapping the morale of the strongest in pursuit of temporary respite for the weakest. We can never survive as a nation in that way.
The Government's case rests neither on jobs nor on imports. It rests simply on political fear. That is what the Conservative Opposition believe, it is what the Secretary of State for Industry believes and it is what all Labour Members know

to be true. The Chrysler deal was negotiated by one Minister behind the responsible Minister's back. It is a deal that was negotiated in a panic, in response to a political, not an economic, judgment, a deal that in its simplest form is a personal triumph for Mr. Riccardo and a national humiliation for this country.
If one accepts, as I do, the broad conclusions of the CPRS Report, one is faced with an unpallatable but inevitable question. I would ask not how I prop up the company, when all the evidence is that to do so is at best an expensive short-term delusion. I have to ask how I use the resources of Government to assist the harsh human consequences of change in a way that minimises the immediate anguish and offers the most secure long-term future both for the people involved and the nation. That is the question which the Government should have asked and on which they should have acted. That is the question that 1¼ million people have to face, and the whole ingenuity and energy of the Government should be mobilised to help them to do so. There is no reason why the Iran order should not have been completed within a phased rundown of the Chrysler Company. The Secretary of State for Industry could have explained why that option, which he favoured, could not have been pursued.
The questions that need to be answered, if money of the extent involved in today's Order is available, are how the Government can use their armoury of weapons to help those who have to move from job to job and, perhaps, from home to home—

Mr. Lever: Will the hon. Gentleman at some point keep his twice repeated promise and tell the House why he thinks Chrysler believes that there is long-term viability for this company and why it backs that belief with large sums of money?

Mr. Heseltine: I have only to make a promise once to keep it. As the right hon. Gentleman knows, no matter how often the Labour Party makes promises it never keeps them. The right hon. Gentleman need have no anxiety. I am coming to the motives of the Chrysler Corporation.
The second question I ask is how the Government can encourage genuine long-term investment, offering security and


profit. They have failed to show that they have even begun to understand the ways in which this will inevitably have to be done if we are to produce a firm, prosperous manufacturing base in this country.
I want to say something about the one man to emerge triumphantly from this sorry affair. Mr. Riccardo's position is acute and simple. His United Kingdom company will lose £40 million next year. In addition, it needs the injection of a vast capital sum. He cannot countenance either proposition. What options did he face instead of soldiering on at untold cost with a certain loss of £40 million next year?
First, he could have allowed the United Kingdom subsidiary to go bust. That is the "pistol at the head" argument, about which we hear so many hints and get such little substantiation. That solution in theory would be cheap, but it is unthinkable that a major company in that position would ever do it. That was not a realistic option, whatever may have been said, and if the Government believed it they have no one but themselves to blame for their naivety.
Alternatively, Mr. Riccardo could have put the United Kingdom subsidiary into liquidation, paid off the creditors and withdrawn, just as British Leyland is doing in Italy with the Government's approval. But that alternative would leave him with little change out of £100 million next year. The cheap options were narrowing. He could see only one option as he looked anxiously around the world for money to deal with the problems in the United States.
What did he see? He saw the endless, gaping purse of the British taxpayer. In the deal announced today the only cash that Mr. Riccardo has to find next year is £10 million to improve Ryton. The Government will pay for one-third of his work force and lend him enough money to hold out until the United States market gives him a chance to sort out the situation at his leisure.
The Prime Minister said recently that we need a vigorous, alert, responsible and profitable private sector. He has demonstrated his usual consistency by backing a private company whose vigour has seen its home market share decline from 12 per cent. to 5 per cent. in a

decade, the responsibility of some of whose work force prompted the Prime Minister to accuse them of wanting to gratify politico-industrial ambitions and of holding views that were fundamentally amoral, and whose profit record over 10 years turns out to be a loss of £438 million.
I have left out one of those adjectives—alert. Mr. Riccardo is certainly that. The Prime Minister's admiration for that alertness will be paid for by our taxpayers' money and by our workers' jobs.
For a fraction of what Mr. Riccardo was bound to spend next year in any circumstances, he has massive investment, he has pushed his losses on to the United Kingdom Government, he has got a third of his work force out of his company at the taxpayers' expense, and he has kept 100 per cent. of the equity in the company. Mr. Riccardo is known as the flame-thrower. He has certainly burnt up the British Government and the British taxpayer today.
It was something of a relief for the Secretary of State to pass into the quieter waters of British Leyland. It was not long ago that we observed the British Leyland rescue. That belonged, or so we thought, to the earlier industrial strategy, although we may be forgiven for failing to distinguish between the two. My hon. Friend the Member for Mid-Oxon (Mr. Hurd) summarised the situation. The euphoric way in which the Secretary of State for Industry described what is happening in British Leyland is credible only to a Government totally divorced from the newspapers, informed comment, the CPRS Report, and anyone who has the first idea of what is happening in the factories of British Leyland.
We were told when the British Leyland rescue took place that there would be a new spirit of worker participation. There have been more strikes since the rescue than in the equivalent preceding period. I understand that Lord Ryder went up to tell the workers how to behave, and there were two more strikes the next day. Yesterday workers walked out because cats had turned the paint shop into a public lavatory.
There was to be new investment in much-needed machinery. In practice—has not the Secretary of State for Industry been told, has he not been briefed?—the management has now stopped all


capital expenditure in the car division in order to pay the wages, because there is a higher loss than was budgeted.
A new commercial spirit—that was the promise. It led to "Superdeal", which provided a demand for cars that the company could not produce, to sell at a price that was loss-making, and so the taxpayer will pay. "Superdeal" led to Chrysler's offering reductions of £160 to £200 a car, which was also loss-making, and the taxpayer will pay for that as well, while Ford and Vauxhall watch and wait, certain only that if it goes on, they will be wiser to get in on the act now, before their companies are also run into the ground.
So it is that the few, halting steps that led from Chequers have rapidly retraced themselves away from the icy winds. Far from having a new purpose based on explaining to our people the world as it will continue to be, we must limp a little longer until others take decisions out of our hands. The party that came to power as the champion of national sovereignty, to protect us from its imaginary threat from European nations, has shown itself unable to withstand even the blusterings of a single American multinational company.
The Secretary of State for Industry might expect me to admire his courage in putting from the Front Bench the Government's case for the deal, in which he so patently does not believe. I would have admired his courage more if he had put his own case against the deal from the Back Benches. He may well believe that he owes a loyalty to the Prime Minister who put him where he is. He will come to realise that £160 million is too high a price to pay for so illusory a debt.
We at least shall vote against this misconceived and politically-inspired deception of the British people.

5.46 p.m.

Mr. Norman Buchan: I echo what my right hon. Friend the Secretary of State for Industry said in referring to the absence of Mr. Maurice Edelman, who was one of the many people who instructed me in some of the intricacies of the motor car industry when I first came to the House. He remained

a friend ever after. Maurice Edelman will be a loss to Coventry and the House.
I now move to someone rather more frivolous. Nothing exceeds the gusto with which Tory Members, especially those representing such industrial areas as Henley, advocate unemployment as the solution to the problems of profit. The crisis we face is one of the philosophy of the hon. Member for Henley (Mr. Heseltine), of his system, and his class. I heard in his speech very little compassion, very little about jobs, very little about the workers involved.
The hon. Gentleman used the occasion to pour fun on the various leaks from the Cabinet that we have all heard, and to advocate profitability as the only criterion when we face the problem of more than a million unemployed. Thank Heaven, Maurice Edelman, among others, held humanity at rather a higher level than did the hon. Gentleman, who speaks for the Conservative Party. There is the soul of the Conservative Party. We noted the cheering. When we are dealing with a situation in which 60,000 or 70,000 men face unemployment, the Tories say "Do nothing. Let the criterion of competitiveness have its way." What kind of people are they? What kind of people do they think I represent in Linwood? If the Government had not acted to save the jobs, the men in Chrysler would have done so, and I would have backed them.
The hon. Gentleman used the phrase "multinational companies". We held our breath and waited for a word of criticism. None came.

Mr. George Younger: rose—

Mr. Buchan: I believe that it would be more appropriate to give way to the hon. Member for Henley, if he wished me to do so. I should like to deploy my argument, and then I shall be willing to take interventions from the two hon. Members singly or together.
This is indeed the crisis of capitalism, exemplified by the workings of a multinational company. There are now multinational companies with more power, through their wealth, than individual nations and States. The 200 largest companies in America—that is not very many for one finds 200 firms in a small town—control a larger budget than every nation in the world with the exception


of the United States and the Soviet Union.
This is the problem with which we have to deal, and it was the problem which we faced when, in the years between 1970 and 1974 which the hon. Member for Henley dismissed so lightly, we were working out industrial policies to deal with it. It is against this background that we have to look at the Chrysler situation.
Churchill once said that the purpose of recriminations is in order not to commit the same mistakes in the future. Therefore, it is worth looking at one or two of the Reports and to measure what they say against the background of the Chrysler company.
We have had a lot of fuss and fun about the CPRS Report coming out only today. Its main conclusion was that we had an over-capacity of 25 per cent. On both sides of the House, this is the figure picked on and, although I shall deal with the criticism of over-capacity more fully later, I put out the caveat now that the reason why there is over-capacity in any industry is that capitalism creates it so that it can make profits when the market rises, with the result that when the market is not in a boom condition, industry is in a position of over-capacity.
The Report goes through a number of points at which it is worth looking. It refers to the competitive weakness of the British car industry. It refers to poor distributive networks abroad. In the case of Chrysler it had very good outlets. The trouble was that, following our entry into the EEC, it moved its outlets in Europe towards Simca production.

Mr. Richard Wainwright: Why?

Mr. Buchan: The reason is that Chrysler had a foothold in the Common Market. Because it is a multinational company it has capacity in Japan, in America and in Europe and, therefore, Chrysler UK Limited becomes expendable unless we are prepared to finance it. Chrysler has said to its dealers in Belgium that they must sell seven Simca cars for each Chrysler UK car.
Incidentally, I hope that the Government notice that within this multinational company there is a policy, apparently, to exercise export controls. I assume that

one of the British Government's reactions to protect us is to exercise import controls.
Then the Report talks about the products on offer and points out that there are 15 mini-models on sale in this country of which only two are British—the Imp and the Leyland Mini. They are 12 and 17 years old respectively. Some of their rivals are only two to three years old. The failure of Chrysler is that, having established a foothold here, it has not invested sufficiently to develop new models.

Mr. Bob Cryer: On this point about design, my hon. Friend will recall of course that the design team in the United Kingdom section of Chrysler developed a number of new models which were promptly taken abroad. Is it not a characteristic of multinational companies to use British ingenuity and talent and to spread it elsewhere?

Mr. Buchan: My hon. Friend has taken one of my bull points.
On capital investment the Report says that Chrysler can be faulted. A lot of it was through choice, because there was an alternative. Let us look, for example, at the competition that we faced. Let us consider the Japanese share of the market. Of all European countries importing Japanese cars, the United Kingdom comes highest in the list of those countries producing cars. The Japanese share of the British market is 9·3 per cent. The Japanese shares of the markets of Germany. France and Italy are 1·4, 1·3 and 0·1 per cent. respectively. On top of all this, Chrysler has introduced special incentives for the introduction of the Simca into Europe instead of dealing with it in direct competition from Britain.
Those are the problems that we face. The Report says that, if Chrysler were to go, only about 60 per cent. of Chrysler sales in the United Kingdom would be picked up by British Leyland, Ford and Vauxhall, which means that 40 per cent. of Chrysler UK sales would go to a foreign producer.
I do not accept the Report, but it makes a number of pregnant comments, all of which have implications for the reason for the failure of Chrysler UK.
But I come now to what I regard as the most intelligent and comprehensive


Report of all on Chrysler, and it was made by the workers themselves. This Report has not been paid sufficient tribute, and I regret that from the beginning of this crisis it took Ministers five weeks to listen to the workers in the industry. The inner knowledge, understanding and engineering and marketing awareness brought to bear in this Report is outstanding.
The Report analyses the company factory by factory and suggests alternative methods of use. It deals in this way with the main criticism of the Think Tank document, which is the problem of overcapacity, and says:
We do not accept the argument that there is over-capacity' in the British motor industry … We believe that there is a need for positive utilisation of the industry's capacity (rather than its elimination or run-down) in order to meet the need for better and more varied forms of transport. The House of Commons Select Committee concluded that UK manufacturers could take more advantage of their expertise in the design and manufacture of commercial and specialist vehicles of all kinds. Long waiting-lists for British buses and coaches, Land-Rovers, diesel engines, agricultural tractors and heavy trucks show the need that exists for this kind of vehicle.
How can we glibly accept the Think Tank report which says that there is 25 per cent. over-capacity when there is an 18-month to two-year delay on deliveries of such working vehicles as Land-Rovers? They add:
This contrasts with the saturation in the popular car sectors of the market, and demonstrates the ineffective and irresponsible utilisation of the above capacity. However, the widespread ecological and environmental criticism of the private petrol-driven car as a socially irresponsible form of transport suggests to us that we must explore the feasibility of new kinds of product of a socially useful kind to harness the skills of the existing work force and the existing plant and machinery.
That is what is missing in the Think Tank Report. It produces the statistics, but it brings no imagination to bear on them.
I think that the answer of the workers is the better one. There are alternative methods. We should seek to keep the labour force as high as possible so that they can explore the methods for new kinds of production and new vehicles and so that we can call upon their expertise and knowledge to deal with the situation.
The workers also analyse investment. The Think Tank Report says:

It is not an immediate corollary that more investment leads to better and more productivity.
But the opposite is not true. We certainly shall not get considerably more productivity without more investment. The workers' report shows what is being achieved by listing the fixed assets per man in major companies. In Ford US, they are over £5,000, in Volkswagen £3,600, in Renault £2,400, in Ford United Kingdom £2,600—and in Chrysler United Kingdom £1,400. If we compare the annual capital expenditure per employee, we see a deplorable picture. In 1974, the exenditure on plant, machinery and equipment per employee by British Leyland was £258, by Ford £430 and by Chrysler £15.

Mr. David Madel: Would the hon. Gentleman accept that it is not just investment on its own which is the problem, but the use made of that investment—the working methods in the factories—that we must deal with if we are to be more competitive?

Mr. Buchan: This is one reason for using the skills and knowledge of the work force. I was saying that the opposite is not true. Agreed, without investment we shall not get productivity, but if investment is not intelligently used we shall not get productivity, either. That is an additional argument for listening to the workers, but there are other factors.
There are possibilities that, through the operations of multinationals, particularly in respect of the system of price transfer, some of the losses that we have been discussing by Chrysler are less than they are said to be, for the very simple reason that they use the Chrysler Switzerland organisation to handle their overseas sales. As a result, the price per car exported to Europe is about half the price per car of the other major British companies. The profit is made through Geneva, where there is a more favourable tax system for them.
So, for all those reasons—export controls, which lead to dealers pushing Simca, transfer pricing and the fact that they are offering special inducements for the sale of Simca in Britain in competition with Chrysler UK—we should take some of Chrysler's difficulties with a pinch of salt.
Having said that, however, I do not accept the suggestion of the hon. Member for Henley that we are not confronting a major crisis in the car industry and in Chrysler. Chrysler said that if it did not get assistance, it would go. I have tried to argue why this was. This is the problem that faced the Government. I cannot pretend that I am happy at the size of the figures referred to for the immediate run-down in my area. I know that the Secretary of State for Scotland would not suggest that I should feel any other way. I hate paying tribute on the basis of leaks, but it is clear that a considerable part of the Cabinet fought hard on this and that the Secretary of State for Scotland was one of those who fought.
We understand what employment is about in some of these areas. Despite the cheap remarks of the hon. Member for Henley, who has already left, I believe that the main forces which secured a change of policy in the Cabinet were, first, the labour force itself—the magnificent unity between works in the Midlands and in Scotland. Second, the wider Labour movement was not prepared to accept such a fall-out of jobs. Third, that section of the Labour movement which is properly represented in the Cabinet also fought to secure these changes.
If we had any difficulty, it was due to the deplorable fact that the hon. Member for Banff (Mr. Watt) and even my hon. Friend the Member for South Ayrshire (Mr. Sillars) raised the bogy of the SNP and the possibility of Scottish Chrysler going it alone. That was malicious, stupid and ignorant. If the company had gone it alone, Linwood would close tomorrow. As it happens, no engines are made at Linwood, so the end-product, presumably, would have been a kind of "Flintstone" car, running along the roads without an engine.

Mr. Hamish Watt: Does the hon. Gentleman agree that there are sound economic and engineering arguments for retaining Linwood while allowing other parts of Chrysler to go to the wall?

Mr. Buchan: There is the voice of the Scottish National Party. I hope that every Scotsman who works in Coventry will read that, and that every mother and father in Scotland who have a son working in Coventry will read it, too. The

workers in Linwood have a higher morality than the leadership of the SNP, as represented by that remark. They have not looked for a solution that would allow their fellow workers to go to the wall. Nor should they, and nor would I. But the SNP has already said this, and the hon. Gentleman has just said it again. I shall make sure that that is branded on them from Land's End to John o' Groats.
I was shocked by that remark, and have lost the thread a little. I expect that sort of thing from the Tory Party. I had forgotten that the hon. Member was a Tory only two or three years ago. He was one of their converts. St. Paul did better than that.
I deal with Linwood alone not because I neglect the Midlands—my hon. Friends from the Midlands know that we have fought this fight together—but because we have particular problems in Linwood. It is a small town, and if this work had gone it would have been a dead town—a mini-Jarrow. I thank the Cabinet for not letting that happen. Of course, I applaud them for having a rescue operation.
But it is not enough. We must try to find some means of alleviating the immediate problems. I understand the problems of bringing in the Avenger. We shall need a lot of solidarity on questions like that, too. But this kind of weight cannot be put on our town immediately. We should diversify the use of the pressing factory and the aluminium die-casting factory there. Diversification must also be looked for in the Stoke factory, which can do contractual work for other Coventry firms. Such solutions must be found to hold the best of our skilled workers, not only because they require it for the sake of their families and their own wellbeing but in order to keep the core of skilled work that we shall build up from August.
I welcome a rescue operation, but I deplore the fact that it will mean such an immediate drop in employment in my area. I find totally unacceptable the initial figures suggested. I welcome the fact that it seems that Linwood will be put on a more secure basis after that. It will require understanding—understanding way beyond the comprehension of the hon. Member for Henley—between the


workers at Linwood and those at Coventry to secure that objective.
I have argued from the beginning that the right solution is public ownership. When we are dealing, as the hon. Member for Henley said, with a multinational company, one thing that we can call in aid is the power of the State. That should have been used. We should have taken over Chrysler on Mr. Riccardo's own valuation, which, apparently, was nil. We should have held the employment situation until the company picked up. We should have given some of the boys in the research and design centre their heads, to see what they could come up with in terms of the new concepts that they are bursting to get through to the Cabinet. We should have seen in what way we could assist speeding up contractual arrangements on behalf of British Leyland, in the earlier delivery of working vehicles. Only at that point should we have considered slimming down the labour force and moving towards an amalgamation, in two or three years, of Chrysler and Leyland, to make a giant, publicly-owned British motor vehicle industry, rather than just a car industry, which would compete with the rest of the world. I regret that despite the policy that we worked on between 1970 and 1974 we have not found it possible to achieve this solution. I shall continue to press for this solution.
We are in a very deep crisis—deeper than some hon. Members believe—and it does not concern only Chrysler. I do not believe that there is any means of solving it until we take real power from the small groups—who, in a small, tight circle, control the fate of men—and bring it down to our level and into our own hands.

6.11 p.m.

Sir John Eden: I have two interests to declare. First of all, I have a personal financial interest in this industry. Second, I had the privilege to serve on the Trade and Industry Sub-Committee of the Expenditure Committee which conducted a survey into the motor vehicle industry. As a member of that Committee, I should like to pay a warm tribute to its Chairman, the hon. Member for Sheffield, Attercliffe (Mr. Duffy). Throughout our investigations he displayed a single-mindedness and an impartial determination to seek out the

truth in the discharge of his responsibility to the House. I am sure that all hon. Members recognise that and wish to applaud him. Nothing that he did was motivated by anything other than a desire to serve the House. In doing so, he has undoubtedly helped to produce a Report that I think in all humility one must recognise has made a mark in the history of Select Committee Reports. It is certainly a milestone in the challenging nature of its conclusions, and now it has been shown to be fully vindicated and supported in the findings of the CPRS.
I am sure that the hon. Member for Attercliffe will endorse my remarks when I say that on that Committee we were extremely well served by a clerk of quite exceptional merit and also by a professional adviser whose widespread knowledge of the motor vehicle industry has been recognised throughout the country.
Understandably, in defence of the policy that he enunciated, the Secretary of State for Industry rested his case on jobs saved. I fully understand the view expressed by the hon. Member for Renfrewshire, West (Mr. Buchan) representing, as he does, a constituency that would have been affected by the closure of a major source of employment. However, all hon. Members sooner or later must face up to the price that we are being called upon to pay for jobs saved. There has been an attempt to recognise this, to endorse the desire to move away from past practices and to change the emphasis of policy, thus giving a firmer foundation to our industrial base. There was an attempt to emphasise the fact that jobs saved in the short term could prove extremely costly by weaknening our industrial base in the long term. Those whose employment was rescued for a short period might find that it was at the expense of the jobs of others, and even of their own, later. This would be the consequence of the failure to grapple with the harsh industrial realities that have overtaken us.
I understood that that was the message of the Chequers strategy. That certainly seemed to be the view of Ministers at that time. The Chief Secretary to the Treasury, speaking in September this year to the London School of Economics, spelled it out very simply. He said:
There are still some who believe that when redundancies are created by a company no


longer being able to sell its goods, the Government can, and should, bail it out. Even if the money was available—and when we are already borrowing £9,000 million, it isn't—bailing out unviable companies cannot, in the long run, save jobs.
It is in that context that we should be considering the decisions that the Secretary of State has announced on behalf of Chrysler.
My hon. Friend the Member for Henley (Mr. Heseltine) spelled out in a brilliant speech the full implications of the Government's decision for this country. I need add no emphasis to what he said. There are harsh lessons to be learned. They are difficult enough to learn as it is, but the Government, by decisions of this kind, are making it almost impossible for British people to realise the truth and accept reality.
The Chrysler decision raises a number of harsh questions, some of which were put to the Secretary of State during the course of his statement and many of which he failed to answer. Clearly, further careful probing of the implications of this policy is needed. In the first instance one must know the implications of the Chrysler decision for British Leyland. It is clear that belated attempts are now being made to try to bring about a better and more disciplined attitude to work throughout British Leyland's operations. That is the reason that underlies the decision of Mr. Derek Whittaker to withhold further capital investment.
With British Leyland's record of strikes and losses being worse in the past few months than in the previous corresponding period, clearly something drastic needs to be done. One of the great doubts that we had in the Select Committee was whether the intention, enshrined in the Ryder Report, of withholding tranches of capital investment in the event of the failure of attitudes to change, could be made to stick. Certainly the test is on right now.
If these disciplines are being applied in British Leyland, what are the comparable disciplines to be applied in respect of Chrysler? Before contemplating a commitment of this magnitude in Chrysler one must ask what discussions took place between the Government and those employed in Chrysler? What undertakings were exacted on behalf of the British taxpayer to ensure that money—his money

—would not be invested in a totally wasteful exercise? One is led to ask what is the effect of the Chrysler decision on Vauxhall? What representations have the Government had from Vauxhall about their decision to invest in Chrysler? What will be their attitude if Vauxhall is next in line, queueing up for assistance from the British taxpayers?

Mr. Litterick: Like hotel keepers.

Sir J. Eden: Not a bit like hotel keepers. This is a basic industry of this country. It is most important to ensure that the money invested in it, whether by the taxpayer or by any other means, earns a proper rate of return.
As the CPRS Report shows clearly, in all respects, no matter what may be the yardstick by which the performance is judged, Chrysler comes out worst. That is no recipe for an investment decision of this or any other magnitude. Clearly the Government had in their grasp the opportunity to bring home the truths and realities of our industrial situation. As my hon. Friend the Member for Henley said, they failed to take that opportunity; they ran from it at the last moment.
Lessons have to be learned. I am sure that the majority of Labour Members understand this as well as do Conservative Members. It is no pleasure to have to spell out these things. It is no pleasure for any Member of Parliament to turn to a report, made available this morning, and to read the catalogue of disadvantages afflicting our industry in this key sector. They are set out simply, and they certainly repay close attention and study. At the outset, in paragraphs 12 and 13 of the CPRS Report, some of the disadvantages are listed as follows:

"(a) Too many plants and too much capacity so that economies of scale are not obtained.
(b) Too many models, engines and body types. British productivity per man is far below the levels in the EEC…We are particularly bad in assembly, where the labour requirements for assembling the same car, even with identical capital equipment, are nearly double. In engines it is 50 per cent. to 60 per cent. more.

13. The main causes of this low labour productivity are:

(a) Over-manning—in some operations 50 per cent. to 80 per cent. more than on the continent, even when both job and equipment are identical.


(b)Slower work pace—slower line speeds, late starts, frequent stoppages, bad work practices.
(c)Poor maintenance—British plants need 50 per cent. to 70 per cent. more maintenance men, yet lose twice as many production hours due to breakdowns, even when capital equipment is identical in age with that on the continent."

Mr. Litterick: Not true.

Sir J. Eden: These are the lessons that have to be learned, and Labour Members do those whom they represent no service by trying to pretend that they are not the stark realities against which we have to judge our own industrial conduct and performance. Until we can get to grips with this we shall never be able to mend the weaknesses in certain sectors of British industry.
One of the ways in which we could get to grips with this—I hope that some Labour Members who have a direct influence in these matters will turn their attention a little more closely to this than they have done in the past—is to seek by some means or another to reduce the number of different unions represented in a single car assembly plant. Hon. Members should realise that it is important to rationalise labour, productivity and work force. That is desperately needed.
Chrysler has a longer history than that of the past few months. Its history goes back to the days of the old Rootes Group, before Chrysler came on the scene. Since Chrysler took an increased stake in, and ultimately total control of, the United Kingdom operation it has undoubtedly come to the conclusion that this is a place in which it would not willingly continue to invest. There are many reasons for that view, and this is probably not the place to go into them. Undoubtedly some of those reasons are the result of a false impression on the part of Chrysler's American management about what it can achieve in its United Kingdom operations. Perhaps there was a misunderstanding over the approach at the start of the company's full-scale ownership. These are matters which require further study.
One point that the Secretary of State emphasised was the need to retain capacity to meet the important Iranian order for completely knocked-down vehicles. We should bear in mind that the future of this contract is not so secure as some

would have us believe and that there is the possibility of this order being scaled down in the fairly near future as Iran's capacity to make these vehicles increases. This warning is set out clearly on pages 48 and 49 of the CPRS Report. This was something to which we drew attention in our Report from the Select Committee.
There are many points that arise during this debate that could and should be made. It is unfortunate that we have only a short time in which to speak. Perhaps the lesson that most bears underlining is that the motor vehicle industry should be seeking to get better consistency in the quality of its product, to ensure continuity of supplies, to bring about much-needed improvements in productivity and, above all, to achieve the changes in attitude without which no further investment can be justified. It is a matter of regret that the Government have missed the opportunity to drive home these lessons.

6.27 p.m.

Mr. Eric Moonman: May I add my voice to those who have already spoken of the great loss we feel following the death of Maurice Edelman. There is no question but that this was the sort of subject in which he was greatly interested and to which he was deeply committed. The letter in The Times today shows that he had his own ideas about how the problem should be resolved. We shall miss him. He was a great civilising influence on the House.
I want to deal with one part of this wide debate. I believe that the Government, in their negotiations with Mr. Riccardo, had a good and substantial case to argue on legal, moral and practical grounds. My contention is that we have lost the opportunity to argue that case. This is a matter of great regret because, despite some of the speeches we have heard—and this will become more evident as the debate progresses—this is not a matter which separates the House on party lines. I have the same misgivings as have been expressed by some Conservative Members when analysing this problem. Some of us have grave reservations about what we heard this afternoon from the Secretary of State.
The question of rescuing Chrysler in Britain cannot be looked at in isolation. It has to be looked at in the context of Government industrial relations and


how we can get that relationship right. One of the great dilemmas over the past 15 years has arisen from the fact that successive Governments have failed to provide the ground rules to industry. It is a serious matter at a time of expansion. It becomes critical when, as now, we have to take decisions in dealing not only with inflation but with poor industrial performance on the part of organisations within key exporting industries.
If the Government are to command respect and co-operation from industrial management they must show that they understand and are prepared to apply the principles of good management. In the past few months they have obviously begun to show that this could happen. The Government's basic industrial relations policy is sound. The National Enterprise Board, planning agreements, the nationalisation of industries for which the Government are the principal customer, reflect sound common sense. The fundamental aim of increasing investment in profitable industry is also worthy of support. It is all the more distressing, therefore, that a strategy which, incredibly enough, appears with the date stamp of November 1975 should already have been divested so soon. I do not believe that economic or industrial planning has to be inflexible "throughout the whole of the period". Anyone who has had any industrial experience must be alarmed—and industry will feel the same reaction—when that plan, with all the merits I have mentioned, is immediately altered as it is in this case.
None of us should be under any illusion that the Government's statement on Chrysler is a major shift not only in terms of the sum of money involved and in failing to follow-through its stated policy of backing winners, but also because its creates a psychological mood, not only in the motor industry but elsewhere, that competence, skilled performance and intelligent marketing are now the qualities that we want to reward.
The most regrettable feature of the whole incident is that somehow a group of people within a company, both management and men, have said, "We are going to the front of the queue". I resent this, not only from a constituency point of view but from the point of view of the country, because it is an enormous

sum of money. If we want to get people to believe that a fair decision has been made, they must also have the belief that no group of work-people and no organisations can use their muscle to move to the front of the queue. Yet I do not believe that, as politicians, we can lecture to any group of people and say "You must consider the national good and need" as Governments have done in recent years, if we are prepared to tolerate a situation of this kind. It is quite nonsensical and unfair.
The important document called "Industrial Strategy" caused a great deal of debate, but those guidelines must now have been affected by this decision—make no mistake about that. We have to ask ourselves where the Government's industrial strategy is now. It is extremely worrying that the Government seem to be prepared to depart from their policy in order to prop up an ailing motor manufacturing company which is not even owned by British shareholders. There is a widespread feeling among many people outside this House that any money put into Chrysler will go into the pockets of the American shareholders.
The Government should explain why they are prepared to put so much money into an American company without taking any British equity shareholding. Do the Government intend to look, likewise, at Ford or General Motors? I put it quite bluntly that the Secretary is putting the credibility of Government industrial relations at risk. This is a major decision, and I am not convinced that even today my right hon. Friend quite appreciates how serious the drift is from the industrial strategy.
My next point relates to the scale of the industry. This concerns many people outside Chrysler, and in view, of the importance of the CPRS Report, there has rightly been some anxiety about its late delivery, which is to be regretted. If we save Chrysler, it may be at the expense of British Leyland and other companies in the industry. If contraction has to come eventually—and the day may not be so far away, whatever the Government do—one has to ask, why not at this stage?—and prepare for it by using some of these reasons to aid the potential unemployed.
I understand the sentiments of my hon. Friend the Member for Renfrewshire


West (Mr. Buchan), who spoke movingly from a constituency point of view. But he must ask himself whether it is inevitable that if this policy is approved we shall have to go through the same exercise again in two years' time. We are talking not only about the credibility of Chrysler, but also about saving jobs in the medium-long term. Today's decision will undermine our economy and our long-term chances of survival.
It is clear that the Cabinet have been faced with a harsh decision, even if we are inclined to ignore what we read in the Sunday Times. I say with sadness that I believe that this Cabinet has been intimidated and overwhelmed by events. It has certainly been impressed by the overstated political implications of the closure of the Linwood plant. But if we are taking decisions with half an eye on the Scottish political scene, the Scottish National Party has made greater inroads than any of us imagined, and certainly more than it deserves. Above all, the Cabinet have been intimidated by Mr. Riccardo.
I do not know how many hon. Members have got a copy of the report and the declaration of intent from Chrysler, but this must be the most scandalous piece of paper which any company in this country has negotiated with the Government. There are hon. Members on the Government side of the House—some more interventionist than others—who will nevertheless agree that this is scandalous sell-out. It is no commitment by Chrysler at all.
My hon. Friend the Member for Renfrewshire, West, I am sure, genuinely wants to preserve jobs in his constituency, but he will find little to be confident about.
No conditions are asked for by the Government in the document. It is a series of general statements of good intentions, and even the desire for new models. I would have thought that the last thing that one would expect in a truly hard-hitting report by a company whose record has still to be determined, is that it would talk about new models. It is an extraordinary reflection of pious hope. Nothing in the document commits Chrysler in any way whatever, and therefore by bailing it out we are placing the greatest stress on other motor companies.
The House will forgive me if I, too, make a constituency point but some of us have very large numbers of people in our constituencies who work for some other motor companies. I have been approached by Ford management and workers and they have explained that they have got through very difficult periods with a more successful approach than Chrysler.
In my constituency, between 7,000 and 8,000 people work at Fords, which means that probably 20,000 families are involved. They are asking what is the evidence on which the Government decision was made. Let us look at the track record.
The aim of the Government strategy was to back winners, and I am not prepared to have a lapse in my rational thought processes to accept any Government saying, one month, that they are going to back winners on the basis of competence and skill, and then saying, the next month, that they will now use different criteria.
In a comparison of added value in the motor industry, we find that last year Ford added £4,100 per man, with an index figure of 69; British Leyland was down, at £2,600, with an index figure of 44; Vauxhall did better, with £3,500, with an index figure of 59; Chrysler was £2,400, with an index figure of 41. I do not have sophisticated constituents, but they have a right to know why the Government ignored this sort of performance in making up their mind. I am not too sophisticated, either, so I must be excused if I say that I, too, would like to know as well. I have not heard an adequate explanation up to now.
The question still remains whether there are not better uses for this money. We all have a responsibility, if we are to criticise the Government, to say how we would like to see this money spent in a different way. Over the last 12 months, I have received requests from small companies in my constituency, and I would not be surprised if other hon. Members had received similar requests. These companies said they would like to invest in a piece of equipment or plant, and I have put their case to the Department of Industry, sometimes successfully. The sums involved in such requests amount to between £10,000 to £20,000. The


numbers of employees involved are not very many and they have not got the muscle to get to the front of the queue. We are talking about companies which, with assistance, would be able to stay in business with perhaps 100 or 200 employees, for five to ten years. Over the country as a whole, that is a lot of people.
The Government should not think in such global terms. They forget that an essential feature of industry is that we still have large numbers of small companies which could benefit from this enormous sum of money if it were spent in a better way. It does not need an economist to recognise how many small companies could be helped with just a portion of the money which is being put into Chrysler, with better response than we are likely to get from Chrysler. The Government's industrial policy makes sound management sense, but it is not good management to prop up Chrysler now. There are sounder ways of dealing with unemployment and better ways of helping people to get other jobs.

Mr. Les Huckfield: Tell us.

Mr. Moonman: My hon. Friend is entitled to argue his constituency case but he has no right to prevent others from doing so. I say this however: if we are to relate this debate only to matters affecting constituencies, the nation as a whole does not even have a chance.
It is not for me to defend the Government. Someone from the Front Bench has to say whether there is still a credible way of securing a partnership between Government and industry.

6.40 p.m.

Mr. Richard Wainwright: Liberal Members share the general sense of great loss at the death of Maurice Edelman, who, among many other achievements, contributed unfailingly in this House to debates on the motor industry, in an original, engaging and elegant way. He will be deeply missed here as well as elsewhere.
The central point of this debate on the motor industry is strategy, and I shall deal with that. However, I first wish warmly to endorse literally everything said by the hon. Member for Basildon (Mr. Moonman), particularly on two points. The first is the monstrous unfairness of this Chrysler proposition to all those

worthy industries in the country that are being left out. Secondly, I agree with the hon. Member that on the point about saving jobs, with Chrysler we are probably talking about saving them for only two years, or even less. When, as was said earlier today, the cost works out at about £10,000 per job, we must remember that we are paying all that money to save these jobs for only a short time.
On the more central point of the debate, I must repeat what has been said from the Liberal Bench on every occasion within the last 12 months that this industry has been debated. It is intolerable, from the point of view of the effectiveness not only of Parliament but of the Cabinet, that in the last year these matters have always been looked at from a narrow view induced by panic, and never in the context of the motor industry as a whole, including its vitally important components sector. They have never been looked at in the context of British manufacturing industry, either.
This also reflects on the Conservatives, because if they had looked with care at the appalling financial record of British Leyland during 1970–74, when they were in office, they would have set the alarm bells ringing in the national interest. Still more, if they had looked at the pathetic annual sums masquerading as depreciation in the accounts of Chrysler United Kingdom they would have realised that it could not be long before disaster overtook that company. It was in the classically mismanaged position of having put aside paltry sums that did not even approach the amounts required to renew its equipment and to re-tool for new models.
After all this depressing history, my heart rose on 14th November when I received from the Department of Industry a hand-out about the new Secretary of State. It quoted him, on the need for a realistic strategy, as saying
'By realism I mean, above all, based on the hard facts of world markets and what we can do as a medium sized economy to compete in them a lot more strongly that we have in the past.'
It went on
It was essential to develop a way of determining priorities, continued Mr. Varley, since the amount of money the Government had available for industry was limited. The new approach would be a starting point for developing the Government's own industrial planning".


The new approach has not lasted even a month. Here we are again, being asked at pistol point to take a decision that was vouchsafed to us only at 3.35 this afternoon and that will have immense consequences. It is an insult not only to Parliament but to all those industries which are well managed and whose workers give of their best. We have at the last moment received copies, neatly bound and obviously prepared for many weeks, of the Central Policy Review Staff study. In particular, there is the magnificent chart 36, which should be hung in every sixth-form room in the country. It shows in the most splendid form, which I thoroughly applaud, a chronicle of inevitable disaster starting with
Failure to rationalise product range and plant structure.
It goes through all the stages of catastrophe, until one arrives at the state in which Chrysler United Kingdom and the greater part of the British motor industry are today.
However, even the CPRS study fails to put the matter in anything like the full context provided by the report of the Select Committee under the chairmanship of the hon. Member for Sheffield, Attercliffe (Mr. Duffy). It does, however, rub in many of the facts that should be taken into account before this matter is decided tonight or tomorrow. One of those facts is that in the EEC there are 14 motor car manufacturing and assembly firms with a capacity to produce 15 million vehicles annually for a market that is estimated, in normal times, at 10 million. In the United States, however, where the market is estimated to be of the same size, there are only four firms, and they provide a similar number of vehicles.
The CPRS study also issues the warning, which the Cabinet should have taken firmly into account before giving way to Mr. Riccardo, of the threat to our exports of the rapid development of the motor car industry in continents such as South America and the Middle East and, as we shall know to our cost, in Eastern Europe. The study is also most eloquent on the dangers of fragmentation in the British industry.
I come now to the crucial point of the CPRS recommendations, where the Report says quite explicitly that there

are at least three too many motor car assembly plants in Britain. Yet, faced with that clear recommendation, which was well supported by a wealth of evidence, we are proposing to try to save for a couple of years, or, at least, until the next General Election, all the assembly plants of Chrysler UK. It must be brought home to the country that this strategy, as it was put before us by the Secretary of State, simply will not work.
I asked the right hon. Gentleman immediately after his statement whether he would reconcile Chrysler's grandiloquent statement of intent—the second that we have had to endure from Chrysler—with the amount of finance mentioned in the statement. He was unable to do that there and then, but he promised to deal with the matter during his speech. However, he did not even approach the problem when he opened the debate.
In this difficult situation we have to rely on whatever advice is at hand. I have been assisted by the Bristol University motor industry research group. Hon. Members will have seen its work in the Economist, The Guardian and the Observer. After an infinite number of calculations, taking the Sunday Times leaks as the best indication it has—and a very good indication they were of the Government's intentions—taking what might be called a central assumption about sales over the next five or six years—neither the best nor the worst that could be estimated for Chrysler—and taking full credit for all that is known of the Iran contract, it arrives at the following figures: for 1975, as is well known, there will be a loss of over £50 million. In 1976—Chrysler agrees with this figure—there will be a loss of about £39 million. In 1977, assuming that the Iran contract goes ahead, the loss will be reduced temporarily to £2 million. In 1978, there may even be a small profit of £4 million. All these figures are in terms of 1975 values.
In 1979 the losses will start again, with a loss of under £10 million, and after that the losses will begin to escalate again. On this basis, by 1979 Chrysler UK will have to appeal to the British Government and taxpayers for yet more vast grants in aid. The General Election, of course, will be over and the cosmetics will have been applied for a modest amount of time.

Mr. John Mendelson: As the hon. Gentleman descends into the sort of persiflage and electoral propaganda which he used in his last sentence, and as he is a constituency neighbour of mine whose constituency is not far from the steel industry, what advice would he give the Government who are faced over the next nine months with a possible direct additional unemployment figure of about 55,000 in the motor car industry and perhaps another 70,000 in industry, including the steel industry, and those industries which produce components for the motor car industry?

Mr. Wainwright: As the Government have refused to tackle this matter in a proper context I am not prepared to devote the time of the House to a full answer.

Mr. Nigel Lawson: The hon. Member for Penistone (Mr. Mendelson) has just come into the Chamber.

Mr. Wainwright: If the hon. Member for Penistone (Mr. Mendelson) would stay in the Chamber, if he can bear to do that for a moment—

Mr. John Mendelson: Oh.

Mr. Speaker: Order. Please can we get on as quickly as possible. A great many hon. Members wish to speak.

Mr. Wainwright: I do not intend to follow the hon. Member for Penistone except on one point, namely, that I entirely dispute his figures, which are based on the premise that if one component firm of the British motor industry goes out of business the whole of this production will be lost to the United Kingdom motor industry as a whole. I pay British Leyland at least the compliment of believing that it will be able to fill a substantial part of any gap left by the slimming down or the disappearance of Chrysler UK.

Mr. John Mendelson: That is no answer.

Mr. Wainwright: It is essential that we should take seriously the strong recommendation of the CPRS study that at least three assembly plants must be phased out as soon as possible. One of the keynotes of the CPRS study is the speed with which rescue decisions must be made if the industry is to survive in a major sense at all. Therefore, we on this

Bench make no bones about the fact that one of the major assembly plants which must go must be one of British Leyland's and only those who are deeply involved in the management can say which. Certainly either the Longbridge works or the Cowley works will have to be phased out and there must be an emphasis on volume cars with a certain premium quality which will make up for the fact that if we produce simply the cheapest model of the most rudimentary kind we cannot hope to compete with the vast and highly integrated plants in Germany, Italy and elsewhere.
It is also necessary to admit that there will have to be even more redundancies. The important point is that if tough action of this kind is taken, in relation to Chrysler UK and British Leyland—the British motor industry as a whole—the jobs of those who are left will be much more secure. The very worst human factor which haunts this industry and which will continue to haunt it after today is the insecurity and the feeling that no one in the industry knows what next week may bring. That is at the base of many of the problems of labour relations.
If the aid to British Leyland had been limited to about £650 million, the same Bristol University team reckons that a cash flow could be generated which would make British Leyland self-sufficient after the expenditure of £650 million of Government money and that on a sensible assumption about sales it would, after four years, be able to produce an annual profit approaching £150 million before tax. It would be a slimmer industry but much more efficient and would offer more secure employment to those remaining in it, who would number, in the case of British Leyland, about 90,000, excluding those employed by component suppliers.
Unless these matters are faced, as the hon. Member for Bournemouth, West (Sir J. Eden) so cogently told us, there will be continued insecurity, recourse to public funds, and resentment by most of the rest of British workers at the favoured treatment being meted out to this particular industry.
In conclusion, it cannot be emphasised too strongly how important it is that for the expected upturn in world trade in perhaps 18 months' time British industry


should be poised to take advantage of the new markets there will then be for the science-based industries and the quality-based industries, at which the British work force is so very good. It is no service to buy off for a mere two or three years jobs which do not provide real work satisfaction for our people, which are conducted in an atmosphere of boredom and insecurity and which cannot possibly be an abiding contribution to the British way of life.

Mr. Speaker: The House knows that I have no power to impose a time limit on individual speeches. However, I hope that hon. Members will aim at about 10 minutes each from now on.

6.56 p.m.

Mrs. Judith Hart: As we are all aware, the debate has raised a number of extremely grave issues, and most of them have already been touched on in the speeches from the Front Benches and in other contributions. There is the question of jobs at stake, not just directly but indirectly. There is the question of the need for Britain to aim at achieving industrial and export success. There is the question of public money, public accountability and public equity. There is also the question, which my hon. Friend the Member for Renfrewshire, West (Mr. Buchan) raised, of the lack of consultation between the Government and the workers in the industry. Then there is the question of our economic relationships with the transnationals.
First, I want to refer to the jobs aspect. I am utterly convinced that it would never have been right to abandon directly at least 40,000 to 50,000 jobs, with all the spin-off that would be involved in the steel industry, on the basis of a one-month's emergency situation presented to us by Chrysler UK and Chrysler America. Therefore, it is bound to be right to preserve jobs. I take that as the starting point for my remarks. I have many serious criticisms, but I am with the Government on saving jobs at this point, the more so because I believe that the House would make a great mistake if it overlooked the fact that fundamental decisions about the future viability of industries which are basic to Britain, including the steel industry—to which my hon. Friend the Member for Penistone (Mr. Mendelson) referred—are being made at a time

of economic depression that is crippling the whole of the world.
The decision that we have now made, in December 1975, could have been very different if we had had to make it in December 1973 or December 1977. We must bear in mind the fragility of any ruthless decisions that might be made to abandon jobs at this moment—decisions that might be bitterly regretted one or two years from now. Therefore, I agree with the Government about saving jobs.
I turn to the question: how? As an additional justification for the Government's decision we must consider the social support costs that have been touched on, but only partly. It is not a matter of merely comparing the cost of the operation which the Government have undertaken with the direct cost in terms of unemployment benefit and supplementary benefit. It also concerns the indirect cost of losing the advantages and the tremendous public expenditure on housing, schools and public facilities that has taken place in the areas where jobs have come into being in the car industry.
In my constituency, when the pits were closing down we watched village after village where millions of pounds were in effect being wasted. That money had been spent on the infrastructure necessary for those working in the pits. One wastes the infrastructure cost if one throws away the jobs and says "We hope that at some time in the future there will be jobs for you." We must balance in the account the cost of creating new jobs in the future.
Taking all these things into account, one finds that the balance sheet works out fairly evenly. But it should not be "jobs at any price" without the prospect of viability and success, which is absolutely necessary.
Lest anyone should suppose that there is some innate contrast between at least this aspect of the Chequers strategy and the strategy of the Labour Party's manifesto, let it be perfectly clear that we are all concerned with achieving industrial success. It is not our aim to invest in industrial failures. However, that means that we must gear production to the market. We must make what we can sell and see how we can improve our prospects of making what we can sell.
I hope that hon. Members will not take this CPRS Report as something that has


descended from the gods in their heavens. It contains quite a lot of very useful material, although if it had been presented to me by my officials I would not have regarded it as suitable for publication until it had been added to and thought out properly.
How is it possible to have a Report about the car industry—which is what it calls itself, although half of it is talking about the motor vehicle industry, about which the Select Committee was talking; the other half seems to be restricting itself to cars—which points out the tremendous involvement of the transnational companies without, as far as I can see—my hon. Friends will forgive me if I have omitted a sentence in my rush to read it, since it was published only this morning—one mention of the element of transfer pricing? How can we look at our car industry without referring to the considerable element of transfer pricing that has been involved in the Chrysler case?
I should like to quote from this "excellent Report"—las my hon. Friend the Member for Renfrewshire, West described it—that has been prepared by the shop stewards in the Chrysler plant, in which they mention the allegations
that artificially low export prices were charged to other Chrysler subsidiaries, particularly in Switzerland where taxes and profits are lower than in the United Kingdom.
They say that there is a calculation available showing that in the last three years alone Chrysler United Kingdom may, through this kind of transfer pricing, have in effect given away £93 million to the Swiss subsidiary.
Where is that in the CPRS Report? May we have a comment on that from the CPRS? If we get one I shall take the rest of what the Report says a little more seriously.
In looking at what is to be done, we must ask ourselves whether we are talking about the motor vehicle industry or the car industry. If we are talking about the motor vehicle industry, again one must raise an eyebrow at Table 26 on page 108 of the CPRS Report, in which there are assumptions—and assumptions built into "demand scenarios". I thought that the word "scenario" had left Whitehall a year or two ago, but apparently it has not. It is headed
Assumptions built into demand scenarios.

It gives a worst case and best case for 1980 and 1985. I look at the line that says
Export to Rest of World"—
that is to say, not to North America; not to EEC countries or EFTA countries; not to Europe or Northern America, but to the rest of the world. In other words, very broadly, it means the Third World. Here we have a figure for 1974 of 0–27 million vehicles for the exports to the rest of the world. The worst case prediction for 1980 is that they will have dropped by almost half to 0–14 million. The best case prediction for 1980 is that they will have dropped to 0–19 million. These are also the worst case and best case estimates for 1985.
All right. There are some of the more developed developing countries which are themselves beginning to undertake car assembly. We know all about that. Every hon. Member who has travelled anywhere knows also that if he could take 10 or 20 Land Rovers in his pocket, they could be disposed of immediately. So why are we not making the things which we can sell? Why cannot we use the labour, equipment and investment in order to go into Chrysler and British Leyland and gear ourselves, not with pessimism but with real hope, to doing the job properly, making things efficiently and getting the better relationship between workers and management that will be necessary for that, and having a success with the motor vehicle industry?
It seems to me that the attitude of the CPRS Report is to say, "There will be only a limited demand for motor vehicles. We have not been very good at it, so let us withdraw and let everyone else make their sales and do well." What sort of attitude is that for the British Civil Service? I sincerely hope that the Government do not accept the advice of the CPRS.

Mr. Alan Clark: On the point about transfer pricing, I accept entirely the figures in the Report relating to this matter. Would not the right hon. Lady agree that the disguised transfer of £93 million by the parent company through trading operations in Switzerland is an evasion of the British exchange controls and a fair indicator of the level of reliability which we can


expect from this company in dealing with it in the future?

Mrs. Hart: I do not draw precisely that conclusion. The conclusion that I draw is that in assessing the viability of the operation of Chrysler United Kingdom, if the Government take into account the losses created by transfer pricing they can have a better perspective of future viability if they approach the company and their dealings with it in that way.

Mr. Tom King: This matter is important. Presumably one person who would know whether transfer pricing was going on is Mr. Riccardo. If what the right hon. Lady has suggested were true, it seems surprising that he was willing to give the whole operation to the British company plus £35 million as a sweetener.

Mrs. Hart: Let me not try to understand Mr. Riccardo's motives. I have some difficulty in understanding my own Government's attitude in this matter, so I do not want to try to get into Mr. Riccardo's mind.
My final point is one of grave criticism of the Government. It relates to the question of public money, public accountability and public control. We have heard this afternoon that there are to be two Government-appointed directors on the Board. We have heard that there will be a planning agreement. Perhaps my right hon. Friend the Secretary of State for Scotland would be good enough to tell the House when it is expected that the planning agreement will be devised, agreed to and concluded. Will it include an audit agreement? Will it include provisions about a guaranteed return?
In terms of the Government's money, which is now to go into Chrysler without any public equity, without any public shareholding, without any firm degree of public control except through the planning agreement mechanism, will my right hon. Friend tell us whether, by the nature of the agreement which has been concluded with Chrysler, all doors must inevitably be regarded as closed to a future option to transfer the loan or part of the loan into equity, or could there still be, not necessarily in the next year, an option to do that in later days under the terms of the agreement? I would have thought

that the agreement cannot be so unconditional that that would necessarily be ruled out for the indefinite future.
Many anxieties are felt by hon. Members on both sides of the Chamber. My own anxiety is very deep. I think it will be an anxiety that will be expressed over and over again by many of my hon. Friends when money is put into a company in this way without taking public equity and public control. I should have thought that the logical answer would be public ownership, relating this issue to British Leyland. We could then have seen what we could make of the whole enterprise. As I have said, there will be grave anxiety.
It is against that background that I shall vote with the Government tonight and tomorrow night—[HON. MEMBERS: "Oh."] No one should be surprised by my last statement. I said at the beginning of my remarks that I support the Government in that they are saving jobs. I think it is right that they should do so at this time.

Mr. John Mendelson: Conservative Members want more unemployment. That is what they are here for.

Mrs. Hart: I hope that as the weeks go by we shall see some satisfaction being given to the Labour Party's intense feeling that public money should be accompanied by a public equity shareholding.

7.12 p.m.

Mr. Hal Miller: I have been in the House for only a relatively short time but, like many others, I pay tribute to the late Member for Coventry, North-West, Maurice Edelman. In a debate of this nature I still find myself involuntarily looking towards his seat in anticipation of his contribution.
The Government Front Bench must take on board that considerable dissatisfaction has been expressed from both sides of the House about the Government's failure to relate the Chrysler operation to any coherent strategy for the motor industry as a whole. That is the main criticism that I wish to make, but there are two other matters to be considered in debating the Chrysler operation. The first matter is that a tactical or holding operation is needed. The hon. Member for Renfrewshire, West (Mr.


Buchan) was eloquent on behalf of his constituents, but a longer-term strategy must be established before the short-term measure can be satisfactorily judged.
The Secretary of State's predecessor, the Secretary of State for Energy, when discussing British Leyland in the House made a salient remark when he said that the British Leyland decision would come to be regarded as a turning point not only in the history of the motor industry but in the whole of our post-war industrial history. Indeed, it has proved a turning point, and we have taken the wrong turning. As far as I can see, we are going ineluctably down that turning.
I pay tribute to the work of the Select Committee that was chaired by the hon. Member for Sheffield, Attercliffe (Mr. Duffy). It was well aware of the dangers of the wrong turning. In paragraphs 153 and 154 we find the Committee making that very point—namely, how to avoid a company becoming a permanent pensioner if it is not viable and is unable to make profits. The only answer the Committee could obtain from the senior civil servant in charge of that side of the Department of Industry was that he found it difficult to envisage any Government finding it easy to turn down one Company when it has approved another.
Is that not the situation in which we now find ourselves? Will it not be repeated before another 12 months are out, unless there is a coherent strategy, which is acted upon? On this point I endorse the remarks of the hon. Member for Basildon (Mr. Moonman), who, I think, had the attention and sympathy of the whole House.
As regards tactical strategy, I must take up some of the remarks of the hon. Member for Renfrewshire, West. I am sorry that the hon. Gentleman has left the Chamber again. Of course, he was very properly defending his constituents, but I also represent a constituency with many motor industry employees and some of his remarks cannot be allowed to go unchallenged, especially his assertion that the workers of Chrysler, if the Government had not intervened, would have saved their jobs for themselves. If the management and the employees had wished to save their jobs for themselves they could have done so. The CPRS Report, at which the right hon. Member

for Lanark (Mrs. Hart) was trying to throw mud—I note that the right hon. Lady has not had the courtesy to wait for the following speech—clearly sets out just how far the management and other employees in our motor industry have to go if the industry is to remain viable. The overmanning in trim departments, maintenance departments and frame-building departments, for example, ranges between 70 per cent. and 100 per cent.

Mr. Litterick: I think it is important that the hon. Gentleman should make his meaning absolutely clear. The sort of statement that he has made is always ambiguous when it comes from the Opposition Benches. Will he tell the House and the people outside whether he means that the Chrysler collapse has taken place because of the deficiences of the workers? Is that what he is saying? If he is not saying that, let him make his statement clear.

Mr. Miller: I referred to the management and other employees in the company. I shall not be pinned down by an intervention of that nature.

Mr. John Mendelson: Why not?

Mr. Miller: I shall develop my argument, if Labour Members will listen. Productivity in the motor industry has not been adequate. I am not seeking to lay the blame on one side or the other as the hon. Gentleman tries to suggest. The fact is that it takes twice as long to assemble in this country as it takes in exactly similarly equipped factories producing the same models on the Continent. That raises a strategy decision to which the Government should be addressing their attention.
The hon. Member for Renfrewshire, West said that capitalism inevitably led to over-capacity In anticipation of an expected upturn of trade. My God, have we not heard from the Secretary of State for Industry and Labour Members from below the Gangway that we should maintain industrial capacity in anticipation of the great upturn in trade which we keep on being told will be next year or 1977? I think that that is very much a case of the pot calling the kettle black. How could Chrysler have possibly invested more money if it was making no profits? The Select Committee made it clear that the company was in a long-term loss-making situation. How could


it be expected to invest? The hon. Gentleman's complaint shows no understanding of the situation within the industry.
We wish to hear the Government's views on the future of the motor industry and how their declaration of intent relates to their strategy. The figures that we have been given this afternoon, leaving aside the provision for certain losses and possible losses, amount to loans of £55 million and £35 million. Those loans are supposed to transfer the Avenger production line from Ryton up to Linwood and to make it possible for a new model to come out of Ryton. They are also supposed to take account of the other possibilities stemming from the declaration of intent. If that is so, the sums are ludicrously inadequate, as anyone with any experience of the industry would know.
Significant figures are quoted in the CPRS Report. A new pressing shop would cost £100 million, a new power train assembly £150 million, the gear box would involve a figure of £75 million, and a paint shop would cost £20 million. Therefore, what will we get out of the expenditure of £55 million and £35 million? It will certainly not ensure the long-term viability of that company.
My hon. Friend the Member for Henley (Mr. Heseltine) was right to say that the Government gave a promise only to deceive. That is why the jobs allegedly being protected are being endangered—not only those jobs but also the jobs of others in the motor industry. There is no long-term future on the basis of the figures advanced this afternoon. The Government must come clean on the long term future of Chrysler and how it relates to the rest of the motor car industry.
The right hon. Gentleman the Secretary of State for Industry gave no clear answer to me a little earlier in the afternoon when I asked whether the reduction in capacity at Chrysler will have to be matched by a corresponding reduction in capacity at British Leyland if the whole motor industry is to remain viable. However, he later gave a highly optimistic, and indeed euphoric, account of what is happening at British Leyland at present. What is happening at British Leyland at the moment, contrary to the right hon. Gentleman's account, is that capital

investment has stopped. I voted on the Government side to give capital to British Leyland for investment as a holding operation until the necessary bench marks were established on which the progress of the company could be monitored as a pre-condition to further investment.
What has happened is that Leyland has frittered away a vast sum and there has been no investment. Therefore, how can the Secretary of State be so complacent about the progress made in that company? When will we have a chance to review the progress made in meeting those bench marks before we have to consider the £600 million that is supposed to be advanced next spring?
The Prime Minister said of earlier events at Chrysler this year that the Government were not prepared to contemplate the use of taxpayers' money or money borrowed from the Government to gratify politico-industrial ambitions. The Prime Minister was referring at that time to the strike by Chrysler workers at Stoke. His remarks might well have applied to recent manoeuvres by Mr. Riccardo.

7.25 p.m.

Mr. A. E. P. Duffy: As the House knows, I am the Chairman of the Trade and Industry Sub-Committee of the Expenditure Committee. For six months this year my colleagues and I conducted an investigation into the British motor vehicle industry. I warmly endorse the words of the right hon. Member for Bournemouth, West (Sir J. Eden) about the purpose of its work, the rigorous analysis that sustained its findings and the impartiality that at all times characterised our conclusions and, I believe, our recommendations. I also wish to pay tribute to the service we receive from a most able Clerk and specialist adviser.
I pay a further tribute to my colleagues on the Committee for the quality of their contributions and the enormous amount of work they undertook. They assimilated a huge amount of written evidence and attended 60 meetings and made numerous visits. I believe that we were punctilious in the fairness of our approach. We heard evidence from shop stewards at Cowley, Longbridge, Ryton, Linwood, Dagenham, Luton and Dunstable. We also visited Cowley, Dagenham, Linwood, Ellesmere Port and Dunstable, and made a point of


holding discussions jointly with management and unions. In regard to formal evidence, the record will bear out that one-third more unions than management witnesses appeared before us either at Westminster or during our visits to plants.
I have looked briefly at the CPRS Report and I am delighted to see that its main conclusions closely parallel our own. It is important to remember that our Report was about the motor industry as a whole, including commercial vehicles, whereas the CPRS Report dealt only with the manufacture of cars. However, one of our main conclusions—namely, that 12 cars would be chasing 10 buyers in the next 10 years—is confirmed by the CPRS. Therefore, the implications of excess capacity are very serious.
I wish to make a brief analysis of some of the reasons for the British motor industry's present plight. In 1964 that industry was about the same size as the main European motor industries. Its new capital investment produced a new range of vehicles efficiently. Now, however, the United Kingdom industry is small scale in world and even European, terms. The stagnation, relative decline and the financial difficulties facing all but one of the major car assemblers represents an economic catastrophe which, in scale and impact, is almost without precedent in British industry.
The saving grace of the British industry has been the manufacture of commercial vehicles and components. Without those resilient and efficient sectors, our motor industry's balance of payments would barely have been in the black. I find the present situation in the industry astounding in view of the fact that, despite all our difficulties, this country is still a nation of relatively high prosperity. With its high per capita incomes and highly developed and complex industrial base, the United Kingdom is a favourable environment for a motor industry, and a car industry in particular. Although the motor car has its detractors, the fact remains that it has brought freedom of travel and greater enjoyment to many millions of people.
When the purchase of a car is such a high priority with so many people, why has the car side of our industry failed so badly? From my Sub-Committee's study of the industry, I am convinced that Government, management and labour must all share the blame. Governments

have been unable to resist the use of the industry as an economic regulator. Various studies suggest that the British motor industry accounts for a key 11 to 12 per cent. of GNP, directly or indirectly. Its significance in terms of employment and our balance of payments is very great.
All this has proved too much of a temptation to Governments of both parties. The artificial booms and slumps in the market for vehicles have been engendered by changes in sales taxes and hire-purchase terms. This has made it impossible to plan investment production and capacity utilisation over even the medium term. By contrast, the West German Government have avoided a short-term policy weapon for their car industry on the ground that the longer-term possibilities of the industry are the crucial factor in the steady growth of the German economy.
Although in the last few years it seems that Government economic management has taken a more responsible view of the industry, erratic usage of capacity led to reduced investment in plant and equipment, and eventually to reduced investment in new models. To a large extent the damage had been done.
The second tranche of the blame must fall on management. Because of the rate of growth of our economy, which has been lower than that of our rivals, our exports have been essential for the survival of our motor industry. It seems that some managements have failed to grasp this nettle. I do not believe a large home market is needed when we require large exports. If the product, marketing and efficiency are right, cars can be exported at prices that cover full accounting costs of production.
British managements bemoan official interference to the point of the detriment of getting on with the job of designing, producing and selling cars. British management's preoccupation with "production" as such led to insufficient attention being paid to marketing and industrial relations.
Management failure is perhaps best exemplified by a recent incident at Cowley when the management threatened to send home the work force if a production rate of 28 cars an hour was not achieved. When the men worked at that rate they ran out of parts and components because


the logistics of production—the responsibility of management—were not good enough. Poor direction from the top has contributed significantly to the industry's difficulties.
The work force cannot be free from blame. The multiplicity of unions has led to inter-union rivalry and helped to make a poor situation worse. Far too frequently the strike has been part of the negotiating procedure, sometimes even as an opening bid. The strike record of the British motor industry is a sign of the weakness of union organisation and not its strength.

Mr. Ivor Clemitson: Would my hon. Friend agree that his criticisms of the multiplicity of unions and the prevalence of strikes do not apply to Vauxhall Motors?

Mr. Duffy: The record of the motor industry is patchy, but there is much merit in my hon. Friend's reminder.
The union leadership must be able to make agreements stick and grievances must be taken through agreed procedures. This will be a fundamental element in the success of the industry, particularly at British Leyland.
Economies of scale are vital to the industry. The larger the operation, the lower the unit costs. Car making involves foundry work, machining, metal pressing and assembly. The lesson of the last five years has been that a fully integrated and efficient operation requires an output of about 1¼ million units a year. A reorganised and rationalised BLMC with good production, management and labour relations would be large enough to survive. Firms with an output significantly smaller will inevitably encounter difficulties.
Last Thursday, the Expenditure Committee authorised my Sub-Committee to carry out an inquiry into Chrysler UK, provided that the Government's decision involved public expenditure, whether in the form of grant, loan or guarantee. The Secretary of State's speech today made it clear that this condition has been fulfilled, and it may be for the convenience of the House if I state clearly now that my Sub-Committee intends to conduct a thorough investigation of the Government's plan for Chrysler UK, looking particularly to see to what extent it represents value for money.
We shall be examining the purposes for which the money will be used, its accountability and monitoring, the long-term future of the company's British operations and the impact of the of the British industry, particularly, of course, British Leyland. We plan to hear oral evidence from all the principal actors in this particular drama and will be happy to receive written evidence from any organisation or individual which wishes to submit it.
May I begin our inquiry by inviting my right hon. Friend to come and give evidence to my Sub-Committee at 10 a.m. on Wednesday 14th January. I hope he will accept my sympathies in view of the difficult and trying period of negotiations to which he has been subjected and forgive us for placing one extra burden on his shoulders.
I do not wish to comment on the Government's specific proposals for Chrysler because my Committee will he forming its own opinion, but there are some areas of concern which I would like to bring to the Secretary of State's attention.
What will be the impact of his proposals on the publicly-funded British Leyland? How soon will the Iranian motor industry be self-sufficient and what effect will this have on the Iranian contract which is mentioned on Page 49 of the CPRS Report? Optimism aside, what impact will the new Chrysler models have? Why has no equity been taken? Surely when public money is spent there should be commensurate public control? Will there be an increase in the scale of the operation and will this have any effect on production costs? What will be the Government's attitude to other firms in similar trouble? Can we assume that this is a one-off rescue? Did the Secretary of State consider the possibility that the interests of British industry as a whole might be better served by giving assistance on this scale to an industry such as machine tools where we have a proven leadership rather than propping up an ailing sector of an ailing industry?
My Committee was told by the Department of Industry that viability was no longer regarded as an essential requirement for firms that were to be assisted with public funds. We concluded that we were unable to see how a firm could avoid becoming a permanent pensioner if


it were not viable and therefore unable to make profits. This apparent conflict has still not been resolved. In our Report we said that rigid economy and high cost effectiveness, not to mention commercial survival, should be among the criteria for the expenditure of public money. In a case like this, Parliament, as well as the Government, has a duty. This duty does not intrude on the prerogative of Government or the merit of individual decisions, but when public money is spent the objectives of its expenditure must be made quite clear. Contrary to the impression given in the House yesterday, it is not any Government Department or a Secretary of State who should exercise final control. It is Parliament.

7.37 p.m.

Miss Harvie Anderson: I shall try to speak as briefly as I can because I know there are still a large number of hon. Members wishing to take part in the debate. I pay tribute to the hon. Member for Sheffield, Attercliffe (Mr. Duffy) for the part he has played, not only in today's debate but over the many months in which he has worked extremely hard.
However, I find it impossible to condemn the rescue operation which has taken place. In his brilliant speech, my hon. Friend the Member for Henley (Mr. Heseltine) made clear the case many of us would like to support. But those of us who come from a very different part of the country and have lived our whole lives against a background that is totally unrelated to what he was saying cannot go along with his point of view. Though I disagree with the conclusions reached by the right hon. Lady the Member for Lanark (Mrs. Hart) and the hon. Member for Renfrewshire, West (Mr. Buchan), because there is no final and attractive answer in nationalisation, I have to recognise that maintenance of employment on a scale that is at least acceptable at a time when there is no alternative employment and when we have an ever-rising unemployment rate is something we have to consider very carefully.
One hon. Member said earlier that "we should now make a start"—that is, to be tough. This is always a facet of the argument when considerations such as those involved in the Chrysler situation are before us. I should remind my hon.

Friends that this was a consideration when the problem of UCS cropped up early in the life of our own Government. For the same reasons, we were obliged to take a similar course to the exercise before us today.
That is why I support the rescue operation, although I am highly critical of the amount of money involved. I am also doubtful whether the operation will bring the required result in the long term and whether suitable arrangements have beep made to monitor or control this vast amount of public money, although I do not accept what some Labour Members regard as the answer.
We must think also of the effect of this on other industries. Various industries have been mentioned—the steel industry, textiles, paper making—but no one has mentioned the small businesses, of which there are a large number, and which for a fraction of this vast sum could create the expansion and the export markets which are so badly needed. It is only natural that small businesses should bitterly resent a sum of this magnitude being allocated in this way. It is a rescue operation, yes, but we doubt the longterm results of it.
It is surprising that it is not more often mentioned that the car industry, above all others, has been used as a regulator for the economy. That has been happening for a decade, and as long as it is used in that way it is impossible to plan ahead. If one cannot assess demand accurately because of another factor which enters and varies that demand, it is not surprising that over-capacity has reached the point referred to in the CPRS Report before us. Planning ahead is essential in any industry of this size, and some idea of public demand is a basic feature.
We are faced with the extra capacity referred to in the Report, the criticism of investment levels and no long-term proposal for correcting the weaknesses set out in the CPRS Report and the Expenditure Committee's Report. Unless we set about correcting those weaknesses, as my right hon. Friend the Member for Bournemouth (Sir J. Eden) said earlier, we shall not be able to put the industry in a competitive position within the time scale involved with the money which we are considering today.
The Central Policy Review Staff Report says that employment in the motor industry could fall by 275,000 in 1985. Let us recognise that what we are trying to salvage today is within managable proportions compared with the possibility of having to deal with 275,000 unemployed. Therefore, we have a duty in looking ahead to try to make this immediate operation work, and work effectively.
We cannot have expected—and I do not think my hon. Friend the Member for Henley can have expected—the total shutdown of the Chrysler company overnight. But here the Government are open to great criticism. The primary reason for nobody expecting that to happen is that there is no suggestion of restriction in any other sector. It would have been illogical to expect one industry to bear curtailment of this magnitude when there is no evidence of the curtailment of expenditure in other spheres which many of us believe to be essential.
Coming to the immediate prospect, we have to consider how to contain and control the situation, which means seriously examining a whole range of aspects that have gone wrong. We have to look at the quality of the product, delivery dates, productivity rates, overmanning, and last, but by no means least, industrial relations within the industry. None of us can deny that the number of disputes in the industry has far exceeded the normal level. The faults lie throughout the whole work force at every level. Some of us have been in fairly close contact with one motor plant ever since its inception. We have a duty to make possible a viable future for the industry after more substantial redundancies than many of us like to contemplate, some in my area. We have a duty to put to the work force that this is the last chance, and that in this huge operation the immediate rescue will have to be proved to be worth while in a matter not of weeks but of months and no longer.

Several hon. Members: rose—

Mr. Deputy Speaker (Sir Myer Galpern): Order. There are 12 hon. Members who are anxious to take part in the debate. In the 75 minutes remaining for Back-Bench speeches, it will help if hon. Members are reasonably brief in their contributions.

7.46 p.m.

Mr. George Park: When my hon. Friend the Member for Sheffield, Attercliffe (Mr. Duffy) told the House that his Committee intended to investigate the Chrysler deal and issued invitations to the Front Bench to attend, the thought passed through my mind that unless my hon. Friend supported the Government tonight in the Lobby there would be nothing for him to investigate, because Chrysler would have gone.
Every hon. Member has been a prospective parliamentary candidate, but how many hon. Members have been prospective members of the dole queue? That is what we are discussing. I fear that too many hon. Members have no experience in that direction, and that is why they have dealt with this serious issue in the way they have.
I shall greatly miss the wise counsel and courteous approach of the late Mr. Maurice Edelman, who was the Member for Coventry, North-West. I was glad to hear the tributes paid to him today. He was as anxious as I am that we should not, in his words, be "taken for a second ride" by Chrysler. He was referring in part to a delegation that he led in 1964, of which I was a member, as the convener at Chrysler, Ryton. We went to see the Minister of Technology to discuss the difficulties of Rootes at that time, which were similar to those of Chrysler today.
In the negotiations, which preceded the acquisition by Chrysler of 30 per cent. of the equity, undertakings were given that nothing would be done to disadvantage the United Kingdom operation. A Government director was appointed, but he never once made a report. When Chrysler acquired the whole of the company, he said that he felt no further obligation because he was then a Chrysler director. Therefore, my late hon. Friend the Member for Coventry, North-West was wondering, just as I am wondering, what are the terms of reference of the two directors to be appointed. At the very least they must report regularly on the company's performance.
I should much have preferred the Government to take a share of the equity in putting in this money, but I ask those who advocate giving no help to consider the


cost of putting all the Chrysler employees and the workers in their suppliers on the dole. The average redundancy payment would be about £760. For the Chrysler workers alone that would amount to £35 million. A married worker with two children would be entitled to draw £33 a week in the first six months. He would also have a rates rebate, his children would have free school meals, and he might be entitled to supplementary benefit. The workers would cease to pay income tax, at an average of £10 a week. That item alone makes a total of £500,000 a week. There are earnings-related benefits for the first six months the total cost of which would be about £70 million. If hon. Members do some simple arithmetic they will find that the amount of money the Government propose to put in the company is close to that. They must ask whether it is a more constructive way of using the money than to throw men on the dole, with all the frustrations that that brings, particularly in the areas mainly affected—the West Midlands and Linwood—where there are no alternative jobs at present.
I am not pleading a constituency interest. Some of my hon. Friends who have felt that that has been done have missed the point. We are talking about Chrysler UK, a company that has ramifications throughout the United Kingdom and that keeps many hundreds of small businesses going. Choking off the orders from Chrysler would mean choking those companies as well.
The CPRS Report and experts from Bristol have been quoted, as well as the Select Committee's Report. I have only one thing to say to people who place so much faith in the experts. The experts were wrong about the RB211, and they can be wrong again.
I believe that Chrysler can be rebuilt into a viable company, if certain prerequisites are met. There will have to be a rebuilding of the Linwood toolroom, for a start. It is nonsense to talk about new models unless there is a toolroom to produce the tools. It is stupid to imagine that the company can reach good production levels in the Stoke machine shop, when 3 per cent. of the machines there are more than 33 years old and another 30 per cent. are more that 14 years old. If hon. Members had

a chance to see the sophisticated equipment at Simca they would have the complete answer to the difference between the productivity levels of Simca and Chrysler UK. In 1974, capital expenditure had reached the ludicrous level of £15 per worker in Chrysler, compared with £430 for Ford and £258 for BLMC. The sum of £15 per man is not enough to maintain the machines. That is another reason for the rundown in Chrysler.
The Iranian contract, and all that it would mean to this country if we did not carry out contracts, is another reason for helping Chrysler.
I accept that the input of Government money demands a complete change of attitude by the work people in Chrysler UK and by management. The attitudes which prevailed at times were certainly more like trench warfare, as one hon. Member has said. But those attitudes may have been telescoped into the very recent past, and may have been brought on by the uncertainty caused by the rundown that I have mentioned. In 15 years as a convener I had three major strikes. I do not think that that is a bad record, by any yardstick.
The current Reports seem to take no account of the fact that it is not so long since the car trade was a seasonal occupation. One was six months at work and six months out of work. Yet even in that climate companies prospered, made profits and paid good wages. Reading the tale of gloom in the red-backed Report, one would think that everything must go our way before companies can be successful. We managed to survive in Coventry and the West Midlands on six months in, six months out.
The industry is not one that responds well to examination on a statistical basis. Cars are bought when the economic sun shines. It is accepted in the trade that people do not buy cars when the snow is on the ground. The choice of a car is highly individual. It is not always related to reason or facts. Otherwise, some hon. Members would not be driving the cars that they are.
The CPRS Report refers to overcapacity, but I believe that that is due to the concentration of vehicles in the same range. It leaves out of account the long waiting lists for British buses, coaches, Land Rovers, diesel engines, tractors and heavy trucks. That was


mentioned only once today, by my right hon. Friend the Member for Lanark (Mrs. Hart).
I ask those who think that aid to Chrysler would impair the recovery of British Leyland "What guarantee have you that if Chrysler were out of the way British Leyland would fill the vacuum?" There is no such guarantee. The vacuum could easily be filled by further imports, which would have an effect on the balance of payments.
Unlike many hon. Members, I believe that the aid offer is a declaration of faith in the workers and management of Chrysler. It is a courageous decision in the light of many conflicting circumstances.
In conclusion, I should like to ask three or four questions specifically related to Ryton. What is the time gap between the transfer of the Avenger to Linwood and the arrival of the Alpine from Simca? What happens in the interim? What build-up is expected at Ryton? Is Ryton to be regarded as a second preference for production of Alpines? I also want to put the question that will definitely be put to my right hon. Friend when he sees the trade union representatives—can there be work sharing, because in Coventry we believe in sharing bad times?

8.0 p.m.

Mr. John Wells: I am extremely perturbed by paragraph 3 of the declaration of intent. In my constituency, we have one of the smaller but one of the few seemingly totally profitable Chrysler plants. I should declare an interest straight away, in that I am a director of a company that is a considerable purchaser of Chrysler products.
The Chrysler plant in my constituency is the very cradle of the Rootes company, and the people who work in Chrysler Maidstone—the old Tilling Stevens works—are people who have been loyal to that company for many years. If it gave gold watches, there would be more gold watches given by Chrysler in Maidstone than anywhere else, because there are fewer strikes and there are better relationships. I am delighted to be called immediately after the hon. Member for Coventry, North-East (Mr. Park), because he knows the position of the works in my constituency.
I am very perturbed to read, in the declaration of interest, the words
which will necessarily involve redundancy … specifically to provide continued employment at Chrysler UK's principal plants located at Ryton, Stoke, Luton, Dunstable and Linwood.
That means to me that the people who work hard and show a profit in Maidstone will be made redundant to satisfy the Government's attempts to stave off my temporary colleagues in the Scottish National Party. It seems that the Government are likely to kick my constituents in the teeth to keep in employment people in Linwood who have given very little loyalty to this company in the past.
I hope that my surmise is wrong. I believe that the hon. Member for Sheffield, Attercliffe (Mr. Duffy) and his Committee should seek to take evidence from Chrysler Maidstone at the earliest opportunity, to discover the excellence of what is being done there. It is a small plant, but it is diversified. Many facets of the Chrysler products are being worked on there. There is engine rebuilding, there are axles, there are parts, and there is air conditioning—all of them necessary, useful and profitable.
We have seen an even smaller Chrysler Works at Canterbury, called Canterbury Trim, where 30 loyal, long-serving and excellent employees of the company have been made redundant in order to hand over their work to Ryton. If the company can treat 30 people in Canterbury like that, it can treat 370 people in Maidstone in the same way. If that is the company's intention, it is disgraceful.
I wrote to the Secretary of State some days ago seeking a specific assurance on this point. I know that the right hon. Gentleman has been busy. I realise that he has been worried. I have seldom seen a more pathetic and worried figure at the Government Dispatch Box than the Secretary of State today. But he might have had the courtesy to tell one of his under-strappers to send me a post-card saying that he had received my letter. The grave discourtesy of the man, and of the Government, to me and to my constituents makes me nearly as indignant as the hon. Member for Attercliffe seemed to be about the attitude of the Government towards his Committee.
While there is still time, I hope that the Government directors to be appointed to Chrysler UK will draw the attention of the


Chrysler company to the need to support those of its employees who have, in their turn, in the past given loyal service to the company. A little loyalty would be extremely welcome.

8.05 p.m.

Mr. Hamish Watt: No one in this House will have taken any pleasure from today's statement by the Secretary of State for Industry. No one can ever take pleasure when faced with Hobson's choice. Which political figure in Scotland today would wish to see Linwood close? What should we do with the steel industry in the West of Scotland if Linwood were allowed to close? Much of the output of the steel industry in the West of Scotland is dependent on Linwood as an outlet.
I am especially proud to be a member of a political party which has succeeded in concentrating the mind of the Secretary of State for Scotland on saving Linwood. But how do we see Linwood being saved? It is to be saved by the Government—

Mr. Buchan: rose—

Mr. Watt: I shall not give way to the hon. Gentleman. I have promised to be brief, and I am not prepared to give way—

Mr. Buchan: rose—

Mr. Deputy Speaker: I hope that the hon. Member for Renfrewshire, West (Mr. Buchan) will not persist, because the hon. Member for Banff (Mr. Watt) has indicated that he intends to make a brief contribution, such as will be extremely valuable to the House.

Mr. Watt: Linwood will be saved by saving Chrysler UK. But what chance has Linwood of being viable in the future? The plant at Linwood was brought to Scotland by the Rootes Group under pressure from successive Governments who did nothing to build up the infrastructure of component parts and so on required to get a factory of that kind off the ground.
I should have liked to see Linwood taken in as part of a rationalised British corporation. Then we could have gone on to hive off a viable and well-structured Scottish motor vehicle corporation with cars being manufactured at Linwood, heavy trucks at Albion and tractors and

vans at Bathgate. However, apparently we are stuck with trying to save the whole of Chrysler UK.
It has been my honour and privilege in the past few months to serve on the Trade and Industry Sub-Committee of the Expenditure Committee under the illustrious chairmanship of the hon. Member for Sheffield, Attercliffe (Mr. Duffy). One factor to have come out clearly in the course of the Committee's work is the imbalance in the British motor vehicle industry. We have seen company after company going after the prestigious car market instead of going after the markets which really exist for buses, tractors, trucks, Land Rovers and many other specialist vehicles. We still find too many companies going after the prestige side of the industry which to them, apparently, is the motor vehicle side, and the mass produced side at that. They do not even concentrate on the specialist side, which has paid very well.
It bothers me that we have the Government proposing to prop up still further the over-capacity of the car manufacturing industry. We are told that there is fully 25 per cent. too much capacity for motor vehicle production, yet here we are with the Government proposing to use this money to prop up this section of the industry which has shown itself to be totally unviable.
Another criticism which I make of the Government is that in this declaration of intent they have put virtually no conditions on Chrysler UK. During the investigations of the Committee chaired by the hon. Member for Attercliffe, we saw just how poor was the management of Chrysler UK. If we prop up the company, have we any guarantee that the management will improve? Have we any guarantee that it will attempt to better the relationship between workers and management? In factory after factory we found virtually no communication between management and worker. I am extremely disturbed to think that we are likely to continue the situation where we have workers against managements.
I have no doctrine one way or another. I have no love for Socialism or for capitalism. Every time that I have had to take a decision, I have applied one criterion—will it work? I suggest that this package deal will not work. If


worker continues to be against management, all this money will go down the drain. Workers and management should be represented equally on the boards or else the cash that we are committing today will be totally wasted.

8.11 p.m.

Mr. Ivor Clemitson: We have heard a lot about over-capacity in the car industry. Whether or not there is over-capacity, one thing is certain—that we as a nation are far too dependent upon the car industry. Once we have said that, we have said a great deal about British industry in general.
We often talk as though our industrial problems were of recent origin. The hon. Member for Henley (Mr. Heseltine) was on this tack today. That is absolute nonsense. We have been declining comparatively as an industrial nation for the best part of a century. We were slow to take advantage of the second wave of the Industrial Revolution in the early years of this century. The car was one of the main components of that wave. We did not pioneer the car. We certainly did not pioneer its mass production. That was done by other nations. There has been a number of waves of the Industrial Revolution since that one and we have successively missed out, not in terms of inventions but in terms of their development.
Now we are once more trying to maintain a position basically rooted in the past, instead of accepting the challenges and possibilities of the present and the future. That is the position we are in with Chrysler UK. We are putting money into a company essentially to maintain it as it is, albeit in a slimmed-down form—not to convert it into what it might or, in my view, should be. This is essentially a short-term operation.
Of course, I welcome the saving of jobs. I am as concerned about the jobs of Chrysler workers as is anyone else. There is a number of such workers in my constituency. But if we are really concerned about a viable, long-term future for this enterprise and therefore for the jobs of those workers, we should first of all examine the areas of under-capacity in the vehicle industry and consider converting the

existing assets of plant, machinery and manpower, much of it skilled, to those other uses.
There is no over-capacity in the production of commercial vehicles. I recall no mention in the Secretary of State's speech today of the commercial side of the Chrysler Corporation. Yet 3,000 people work on the commercial side in the South of Bedfordshire. We should consider the under-capacity in the production of diesel engines. We import about £40 million-worth of diesel engines a year. The production of Chrysler commercial vehicles has been held up for some years because they have not been able to get diesels from Perkins—yet Perkins has received a Queen's Award to Industry for exporting 85 per cent. of its products. What sense does that make? It is an Alice in Wonderland situation.
We should consider the under-capacity in the production of buses. Any bus company will testify that it has been waiting for years for new buses. What about under-capacity in component manufacture? So one could go on.

Mr. Nigel Spearing: Do my hon. Friend and the House know that there is no capacity for the custom-building of ambulance chassis? While this may have been brought about historically before the war, the fact that we have no such capacity surely illustrates a back-to-front approach to vehicle building as a whole.

Mr. Clemitson: I am grateful for that intervention, which further illustrates my point. We should consider these areas of under-capacity or, as my hon. Friend says, non-capacity. We should also consider new technological developments and, even outside the context of the motor vehicle industry, other industries as well. Of course it takes time to change, but change we must.
Of course the package that the Secretary of State has presented to us can be criticised for lack of any ownership stake in the company, but my main point is the way in which we constantly seem to pursue short-term expedients, defending the ultimately indefensible, trying to maintain a pattern of industry which is dying instead of converting to one with a future. The way to bring about change is not to let the old die and leave it to the miraculous forces of the market to


bring in the new, as the hon. Member for Henley advocated. That system has signally failed for the best part of a century—not just the last few years.
We need to plan for the new, but some of the major planning mechanisms in the modern world are, as Professor Galbraith has reminded us a number of times, the supra-national companies. Three out of four major vehicle producers in this country are supra-nationals. The problem is how we plan with these planning mechanisms, the supra-nationals. What we have seen in the case of Chrysler is not a planning operation but the spectacle of a company coming cap in hand to the Government for money. We have missed a considerable opportunity. I hope that there will be time to take this opportunity with this company.
We must plan with the planners, but that is not easy when they are not based in this country. The context is not British but European and, increasingly, worldwide. There was a time when the supra-nationals in the car industry were composed of virtually autonomous units which planned, tooled and made cars. Now there is, and will increasingly be, an international division of labour. As the CPRS Report says on page 56 in reference to General Motors and Ford,
They will move towards a total European approach in product development and allocation of production between countries in order to achieve maximum economies of scale.
The fear of workers, certainly in Vauxhall, is that in the process of Europeanisation—General Motors has its own word for the process, "commonisation", a bastardised expression—we shall be the losers. One thinks of the Cavalier car recently imported into this country and sold, with just a Vauxhall badge stuck on it, as a Vauxhall car. The new Vauxhall models have an increasing European or even world content and a decreasing British content.
Shall we end up with Vauxhall or other companies as merely CKD operations—and knock-down, not knock-up, operations? Are the skills of thousands of people in design and tooling processes to be discarded? How can we build in a quid pro quo each time with these supra-nationals? How can we say, "We lose on some but we gain on others"? How can we plan for that?
These are big questions and big challenges not only to the Government but

to the trade union movement. We are only just beginning to look at those questions and trying to find some preliminary answers to them.
This debate easily merges into the debate that we shall be having tomorrow about employment and unemployment. If we accept that there must be some reduction in employment in the motor industry, we must plan for other job opportunities, whether they are to be found in manufacturing or in other spheres. If we do not, the motor towns of this country, the Coventrys, the Lutons and the Oxfords, could become areas far more blighted than even the present development areas.

8.21 p.m.

Mr. David Madel: It is a pleasure to follow the hon. Member for Luton, East (Mr. Clemitson) who is, as it were, my next-door neighbour. Everyone realises what a difficult decision the Government have had to make about what to do with Chrysler. This was highlighted by the letter from the late Maurice Edelman in today's edition of The Times when he pointed to the fact that in the past Chrysler had given certain assurances to British Governments which had not always been kept.
However, first I should like to endorse what the hon. Member for Luton, East said about the lack of information concerning the commercial vehicle section of the Chrysler operation. As he pointed out, to date we have had no information at all about this. When the Minister winds up the debate, will he say how the investment money is to be spread between Linwood, the Midlands, Dunstable and Luton? The declaration of intent by Chrysler says in paragraph 4(4) that
A new van/truck is to be introduced in 1978.
I assume that it is to be produced in Dunstable. Can we be certain that that date will be kept? How much money will be required? How many extra employees will be taken off? Will there or will there not be redundancies in the Dunstable and Luton areas? I am sure that the Government have been through the problem with a fine tooth comb with Mr. Riccardo and I hope that the Minister will be able to say quite a bit about the commercial vehicle section.
As has already been mentioned, the debate also takes in the whole problems of the motor industry at large. I should like to congratulate the hon. Member for Sheffield, Attercliffe (Mr. Duffy) and his Committee on the excellent work which they did in their Report to the House on the problems of the motor industry. Their Report underlines dramatically the two central problems which have dominated this industry since the war. In paragraph 26 on page 9 it says:
The post-war boom with its problems of production rather than demand put the greatest emphasis on engineering. This meant that the three vital areas of industrial relations, marketing and after-sale service were virtually ignored—to the long-term disadvantage of the industry.
That point is endorsed on page 27 where in paragraph 68 it says:
The British motor industry is strong in research, design and development skills and experience.
The second central problem which the Report dramatically underlines is the constant changes in economic policy which both Governments have inflicted upon the motor industry. This point is brought out on page 32 which deals with the NEDO Report. Paragraph 82 says:
The Government should endeavour to avoid the imposition of special measures applying to the motor industry which accentuate the fluctuations in demand".
On page 34 we find that even the Permanent Secretary at the Treasury, Sir Douglas Wass, admits that:
fluctuations in demand during the 1960s had had a de-stabilising effect on investment".
Therefore, the Treasury admits in this Report, from the evidence which it gave, that the motor industry has been used as a yo-yo, and that this has been bad for industrial relations and has not been helpful to the general prosperity of this country.
Another point which must be added is that there was a careless assumption that one could boom ahead with housing, roads and schools in car-producing areas and all would be well. In fact, all that growth in social expenditure, welcome as it was, was based on the premise that the motor industry would provide virtually an everlasting increase in employment opportunities. Unhappily, this is not now the case and it is one of the many dfficulties

that the Government have had to face when deciding what to do about the Chrysler Corporation.
There is an interesting section of the Sub-Committee's Report dealing with investment problems. On page 39, paragraph 96, there is reference to the fact that
inadequate investment and the lower productivity of old plant have been the greatest contributors to the poor profitability of the mass-production car side of the industry.
On page 38 there is evidence from ASTMS. There is reference to the
lack of preventive maintenance carried out in car assembly plants
That organisation feels that this reinforces the conclusion which is drawn in paragraph 75 about the whole question of the amount of time we have to spend on maintenance and repairs to our plant in this country compared with our overseas competitors, especially those in Europe.
Much has been said about industrial relations in the car industry. In the few minutes remaining I shall say a few words about that subject. There is no doubt that the insecurity and the uncertainty of employment in the motor industry has gravely added to the difficulties of people being employed in that industry. I am glad that the Select Committee tried to grasp on page 86 the whole problem and the whole possibility of industrial democracy and worker participation. In paragraph 213 the Committee wisely says that it will not lay down a particular blueprint for this particular matter. But it does point to the fact that many improvements will have to come about in participation and involvement in the car industry if we are to move out of the difficulties.
In fact, the Committee is absolutely in line on that aspect with the recommendations of the CPRS review because in the fifth conclusion of that review it says that there has to be a complete change in attitudes and methods of communication and consultation within the car industry if progress is to be made. Completely at the heart of this matter is the need to have acceptable grievance procedures in the car industry, which every employee understands and which he will operate so that the grievance procedures are used before we get into the difficulties of having a stoppage in plants.
I welcome the fact that the Trade and Industry Sub-Committee is to reconvene. I think it should ask for witnesses from Chrysler to attend. I realise that it cannot compel American witnesses to come here, but in view of what the Government are doing for Mr. Riccardo, the least we can expect is that he will agree to attend to be cross-examined by the Sub-Committee. That will be most useful. We want the Committee to go into the Government's problems. I hope that it will bear in mind the third main conclusion of the CPRS review which says:
It is not too late to correct these weaknesses
in the British motor industry. Those weaknesses are poor quality, bad labour relations, unsatisfactory delivery records and so on.
Much has been expected of this industry since the war and much has been done by it. It has provided a great deal of employment and a great deal of satisfaction. However, training for assembly line workers, different lay-off procedures, a changed system of redundancy payments and new processes of employee involvement are matters which must be grasped by the Government. I hope that they will continue to be grasped by the Expenditure Committee and that it will call for witnesses from Chrysler to see whether we are to get a viable Chrysler operation now that the Government have decided to go hand in hand with the company to see whether improvements can be made.

8.30 p.m.

Mr. Les Huckfield: I shall be supporting the Government in the Lobby tonight and tomorrow evening, although I shall do so with certain reservations. I recognise that the Government have had to take a difficult policy decision. Nevertheless, I welcome their concern to prevent unemployment, although I must say that the 5,000 redundancies that look like being occasioned in Coventry as a result of this agreement will represent a bitter and savage blow to the city. It will mean that the city of Coventry will have more than 21,000 people unemployed and an unemployment percentage above 10 per cent.
I have some reservations, because I cannot help feeling that this is a rather

a botched-up and patched-up agreement. Even using the strongest wallpaper and cement, I do not think that the Government can paper over all of the cracks. What occurs to me—and it has occurred to me and other of my hon. Friends in the context of British Leyland—is that merely putting in money, underwriting losses and guaranteeing loans, does not ensure the future or the viability of Chrysler in this country. Many of us said when it was proposed to inject £3,000 million of fixed and working capital in British Leyland over the next six years that what we had to do—and the remarks made then are just as relevant now—was to move towards the definition of a strategy for the British car industry.
The simple fact which no one can deny after looking at the Reports from the Think Tank and the Sub-Committee, is that there is over-capacity at the smaller end of the model range. When we analyse the investment plans that the Ford Motor Company has had to make for "Bobcat" at Dagenham, when we see the Europeanisation and integration that Ford and Volkswagen now practise we are bound to come to the conclusion that there must be a doubt whether Chrysler UK is big enough to undertake projects on this scale.
Some of us who have examined the Chrysler situation believe that had Chrysler stuck to the original Rootes model strategy when it took over the company and concentrated on being slightly up-market instead of going for volume production—attempting to get 15 per cent. of the market—it might have been in a much more viable position now. Against the doubts I have that Chrysler may be too small to compete in this sort of market, bearing in mind its marginal domestic position in the States, I have to accept, as I hope every other Labour Member accepts, that we could, if this company had pulled out, have faced a job loss of about 70,000. The Think Tank Report says that if the company had completely pulled out of Coventry there would have been an increase of about 82 per cent. in unemployment. If it had pulled out of Linwood completely there would have been an increase of 15 per cent. in unemployment.
That is why I recognise the initiative the Government have taken to preserve jobs. It is not only the jobs that have been preserved that I have to set against my doubts concerning the future viability of Chrysler. I have also to bear in mind the position of British Leyland and that of the importers. Yesterday my right hon. Friend the Secretary of State for Trade, in an answer to a Question, told me that in the first 11 months of this year the import penetration of the United Kingdom car market by the Japanese. Eastern Europeans and Europeans was 33·4 per cent. compared with 27·1 per cent. in the corresponding period last year.
It is well known that at the moment British Leyland has outstanding orders from about 90,000 people. These people are waiting for cars that British Leyland cannot provide. This is not because of the effects of "Superdeal"—because the effects and results of that have been overestimated. What has happened is that British Leyland has seriously underestimated its sales potential. We have, therefore, a position in which the only other British domestic car producer cannot match demand. At the same time, most of the importers, particularly Fiat and the Japanese, have high stocks of most models in this country.
Although the Think Tank Report reckons that if Chrysler pulled out of this country about 60 per cent. of its market could be picked up by other British producers, we have to bear in mind that British Leyland has an acute model shortage while importers have high stocks in this country. I am bound to say that I do not believe that other British manufacturers would pick up the 60 per cent. What frightens me is that if Chrysler were allowed to pull out and if this vote tonight and the Order tomorrow do not go through, import penetration by the Japanese, Fiat and other European companies could increase by more than 40 per cent. One has only to go to Teesside to see the Japanese imports, or Warrington to see Fiat's plant, to appreciate the stocks that importers are now holding in Britain. This proves the level of success that importers already have in this country. I say to some of my hon. Friends that the only alternative, if they

want to maintain the British stake for domestic producers, is a policy of import controls. Without this, I fear that if Chrysler were allowed to pull out the Japanese and other importers would move up to a 40 per cent. or greater penetration of our domestic market. I recognise this particularly in a situation in which about 15 per cent. of the British passenger car market could be at stake.
Although the Opposition have given us some pretty foreboding figures, we must remember that in the last four years Chrysler UK has more or less continually taken 12 per cent. of domestic production. That is a big chunk of the domestic market which could be laid open and laid waste to the importers, particularly if, as we are led to expect, the Chancellor of the Exchequer reveals in tomorrow's debate some relaxation of hire-purchase controls to stiumlate the domestic market. The alternative must be a policy of selective import controls to protect the British market.
I have never advocated the nationalisation of Chrysler or the integration of this company with British Leyland. I believe that British Leyland will have enough difficulties of its own to sort out. The nationalisation of Chrysler UK could lead only to further rationalisation and plant closures. I do not want either the nationalisation of Chrysler or its absorption into British Leyland, but I want far better public accountability than we have in the agreement so far.
I tried to remind my right hon. Friend of the rather weak and certainly unlegislative form of the undertakings that Chrysler gave in 1967. I do not see anything more forceful in the undertakings that Chrysler has given in its latest declaration of intent. Although the Chancellor of the Duchy of Lancaster, for whose financial acumen I have great respect, said that the good feature of this agreement is that he has managed to get Chrysler to put money in, I still have not been told what there is to stop the Chrysler Corporation from pulling out.
I am worried about the situation that we may have to face in one or two years' time when the Chrysler Corporation comes to the Government with exactly the same story and says "We thought we could make it". The Corporation could say


that it was making losses in the United Kingdom, that it was under pressure from its banks in the United States, that its United Kingdom operations had the greatest loss-making potential throughout the world, and that it would have to consider once more pulling out. That is very much the kind of situation that I am afraid we could now be embarking upon.
I do not think this is a five-year or a 10-year strategy. All we have is the importation, in CKD form, of the Alpine into Ryton—that is not going to keep many of my constituents busy—and the transfer of the Avenger from Ryton to Linwood. Presumably it will be the Series 7 Avenger, because I cannot see how any model made at Linwood will sell more successfuly than the Series 6. Apart from those two factors, I see nothing much in the declaration of intent by the Chrysler Corporation about model strategy. Those two factors do not constitute a long-term strategy for the survival of Chrysler in this country. That is why I view the plan as a very short-term strategy. If we were to have a 10-year strategy for the Corporation there would have to be new foundry capacity and the re-establishment of the Linwood tool room. There would have to be a massive promotional campaign to reestablish customer confidence.
I am glad that there will be Government directors on the board, and I welcome my right hon. Friend's initiative on that score. I hope that they will be more answerable to his Department than were some erstwhile Government directors who were put on the Chrysler board. I should like to think that the Government will move towards participation in taking an equity stake in the company.
I hope that it will be remembered that at Ryton, particularly, the company has a very modern plant, and pioneered the introduction of measured day work, so it certainly is not a pig in a poke. Chrysler UK has modern capacity. Though I have some reservations, I shall support the agreement tonight. I recognise the value of the £80 million or £100 million benefit to the balance of payments from the Iranian contract. I would far rather the Government supported a policy of selling British cars to Iran than selling Anglo-French Jaguar fighters to Egypt. That is the kind of test of British honesty and

sincerity that I should like the Government to embark upon.
I hope that when my right hon. Friend the Secretary of State winds up he will say a lot more about how we shall ensure that this same situation does not arise again in two years' time. I welcome the initiative, but I have reservations about it, particularly as some of my constituents will be hardest hit. However, we must move towards getting back the confidence of the workers and the customers to ensure that the Chrysler Corporation stays in this country for as long as possible.

8.43 p.m.

Mr. Robin Maxwell-Hyslop: We have to examine the Danegeld, of which the £162 million announced today is a starter, under three headings. What have the Government done? What have they not done? What should they have done? The CPRS Report, which cost the taxpayer one-third of a million pounds and which we extracted from the Government at 11 o'clock on the morning of a debate on a subject involving the expenditure of £162 million, begins:
The Future of the British Car Industry

1. The prospect is one of very tough competition in the Western European car industry for at least the next decade.
2. The British car industry has serious competitive weaknesses. There are too many manufacturers".

The first thing that has not been done with the Danegeld is to eliminate one of the manufacturers. The second thing that has not been done is to save Chrysler. Let there be no doubt about that whatever. It is proposed to take the Avenger from a factory that was not constructed for it but that was quite close to the source of engines at Stoke to a Scottish factory that is not designed for it, 200 miles from its source of engines. It will then have to be moved all the way back, with a cost penalty that will make it totally uncompetitive in the English market, let alone any export market.
Let no one imagine that the Avenger has been saved, that Linwood has been saved, that Ryton has been saved, or that Stoke has been saved. They have not. Let no one imagine that the taxpayers' money has been saved.
What has been done? The market basis of the huge sums of capital investment in British Leyland is wrecked today. The Government are trying to pay Peter


to rob Paul, who is also being paid to rob Peter—and all this payment is by the taxpayer. The Ryder market forecast, on which the capital investment in British Leyland is based, is grossly optimistic, but the £162 million attempts to buy for Chrysler part of the market that exists for British Leyland cars when it is already bespoken for by the public money, prudently or imprudently, invested in British Leyland. It cannot be double-counted, or accrue to both.
The Government are also transferring unemployment, not saving it. They are double-counting their alleged saving, in that the component suppliers who would have supplied Chrysler will instead supply sales by British Leyland. They may not be the same component suppliers, but roughly speaking there will be the same volume of employment. There will be the same number of tyres, whether they go to British Leyland or to Chrysler, the same number of speedometers, petrol tanks, generators and batteries, and the same area of glass. By robbing Peter to pay Paul we do not save unemployment in the component industries. This double-counting has crept in or deliberately been put in by the Government.
What else have the Government done? They have abandoned the attempt to control inflation. When the Permanent Secretary to the Treasury lost his nerve under examination before the Select Committee and allowed himself to say that no expenditure of less than £1,000 million in one year had any influence on the rate of inflation, the cat was out of the bag. When he said that he could not even imagine circumstances in which £550 million in a year could be committed under the Industry Act, his imagination showed its limitations.
What else has been done? A message has been sent loud and clear to Ford and Vauxhall—why should they retain their operations in Britain? For one reason only—the Government cannot now refuse them money. Ford has been viable to date. If the Government buy part of its market with public money for Chrysler there is an unanswerable case for Ford to ask for public money also. What about Vauxhall? Vauxhall is also not viable on throughput, like Chrysler, in that it can never generate enough money out of its volume of sales

to capitalise the next model, without which it will go out of business. Therefore, we must support two more American firms with the taxpayers' money, and thereby undercut an enormous investment that has already been made in British Leyland.
Those are the bald facts. What should we do instead? In the rescue operation of British Leyland an expenditure of over £1,000 million is involved on machine tool plant and equipment. As things stand at present the bulk of this will be imported across the exchanges at a huge cost in foreign currency, and will provide little employment for people in Britain.
The resources should be directed so that a much, much higher proportion of the plant and equipment that British Leyland will need and for which the British taxpayer will be paying is made in Britain, instead of being imported. That is the positive step that the Government should have taken, which would be a genuine impetus to useful employment in this country.
Moreover, it would then enable the British machine tool industry to generate a volume of turnover in which its production runs would be great enough to get its overhead costs down so that it was competitive again in the export markets. That is the positive opportunity that the Government have missed by the Danegeld paid today.
When the House votes on this matter tomorrow night, it will know what it is doing. It will live with the consequences. As the Danes came back for more, remorselessly, so will the overseas companies come back remorselessly for more and more of the taxpayers' money in order to wreck the basis upon which a huge sum of it has already been committed to the one remaining truly British manufacturer. There never was a more complete circle of folly. The job of the House of Commons is to break that circle.

8.52 p.m.

Mrs. Audrey Wise: This evening we have heard quite a lot of what we are accustomed to hearing from the Opposition Benches. We heard a quite callous disregard for the unemployment of real people. From hon. Members of the Scottish National Party we have heard an open statement


that, apart from Linwood, the Chrysler workers in the rest of the country could have been dispensed with. The hon. Member for Banff (Mr. Watt) has forgotten that in my constituency in Coventry, for instance, there are many Scottish people, and many Scottish workers working at the Chrysler plant. They have relations in Scotland. Perhaps they would not be so keen to hear the hon. Gentleman's remarks.
What I have been waiting for are some positive words. It is easy to be critical. I, myself, have points of criticism of the Government's proposals, which I intend to make, but they are different in kind and quality from the criticisms that come from the Opposition Benches.
We have also heard from a number of quarters the usual remarks about labour relations being at the root of all evil. I have some scepticism about this, because I remember that when we discuss troubles in other trades and other companies, where labour relations are characterised by complete docility and yet the companies go bust or sectors are in trouble, there is no comment whatsoever from the Opposition about the place and importance of labour relations.
In relation to Chrysler, we are talking about a company that is now declaring to the Government that it will work with its employees on the basis of extending employee participation. I am very interested in that. I notice that this same company, Chrysler, produced its plan for employee participation when, and only when, it was seeking help from the Government. There was no word about employee participation at earlier dates; in fact, this company even went so far as to close down its suggestion box system. It said to the workers "We are employing people to think about the way in which this place should be managed", and even rejected suggestions from its workers. I hope that when the Government look at this declaration of intent by the Chrysler Corporation, they will look at it very closely, with a very sceptical eye. But I am afraid that it is being accepted at face value.
Among other things, it is said that Chrysler International will support the effort of Chrysler UK to the full extent of its managerial, product planning and design capacities. I suggest that the

prime motivation in Chrysler's attitude to its subsidiaries is to promote not the interests of those subsidiaries or their respective national economies but the interests of Chrysler International. Chrysler's managerial strength has not yet been displayed to any great extent in Britain. Its product planning has mostly been seen in its skill at transferring products from Britain abroad, along with design.
We have some employee participation if the Government care to use it. We have some suggestions, for instance, about the kind of economies that could be made. I listened with interest, followed by disappointment, to the speech of my right hon. Friend the Secretary of State. I heard him say that he had taken into account the document delivered to him by the workers, but I did not hear him make any comment on any fact or suggestion contained in it. For instance, if economies are being looked for, what about the suggestion made by the shop stewards that internal reorganisation is required to eliminate the restrictive and top-heavy managerial structure that has been imposed during past rationalisations? What about the suggested disposal of the expensive prestige London offices? Have those matters been taken into account? I wonder whether the Government have noted fully the condemnation contained in the workers' report regarding the systematic transfer of machine tools from British plants to Simca and South America? Can we guarantee that that kind of thing will not continue?
I should like to see some evidence of real guarantees. The late Member for Coventry, North-West, Maurice Edelman, has appeared many times in this debate, although, sadly, by proxy. He figured many times in Hansard on this very question of Chrysler, guarantees and declarations. The work which has been done by such hon. Members on this point should not be wasted. We should take notice of it.
We are told that we need the tight integration of Chrysler UK into Chrysler's world-wide activities. That was the phrase used by my right hon. Friend to justify this form of rescue. I am in favour of rescuing the jobs involved and I reject the torrent of hypocrisy that we hear from the Opposition. But when I hear that this method has been chosen because it allows


for the tight integration of Chrysler UK into Chrysler International's world-wide operation, my blood runs cold. That sort of integration is a large part of the trouble and a large part of the problem.
One reason why the Government face such difficulty in deciding what to do about the situation is that Chrysler can hold a pistol to the Government's head because we are now too dependent on Chrysler's international operations. I am afraid that the process now begun will continue, so that in the end Chrysler will be holding a machine gun instead of a pistol to the Government's head. I am extremely worried about this situation.
We should be looking to a more tightly integrated and rational British motor industry, but we have heard nothing about this concept. Indeed, there were some interesting unanswered questions in the Secretary of State's speech. Dealing with public ownership, he said that the idea of two State companies competing with each other was clearly out of the question, but he did not say why. Perhaps he was correct to say what he did, but the House and the workers who are involved would like to know why it is apparently not out of the question to have competition between a publicly propped-up private company and a State-owned company. There could be a rational argument for two State-owned companies. Therefore, I wish that there had been much more than a mere out-of-hand rejection of that concept.
My right hon. Friend said that consideration had been given to linking British Leyland and Chrysler. I am very interested in that suggestion, but I do not pretend to know the answer. I am interested because I happen to have a large British Leyland factory in my constituency, as well as many workers employed by Chrysler. It is not sufficient for the Secretary of State to say that such a suggestion is not practicable. He should say why. I genuinely would like to know the answer to such questions—questions that so far remain unanswered.
The Labour Party manifesto reserved the right to take a public stake or an equity equivalent to the amount of public investment. Again we have received no coherent answer to the question why the Government are not taking such a stake.

If we had an ownership stake, accountability and monitoring of the situation would be far easier.
Therefore, although I appreciate the Government's motives, and at the same time entirely reject unworthy political slurs from the Opposition, I believe that we are entitled to ask, even at this late stage, for a more rational and Socialist approach to our motor vehicle industry.

9.3 p.m.

Mr. Peter Viggers: I join the hon. Member for Coventry, South-West (Mrs. Wise) in her incredulity at the Government's present situation. I must at the outset of my remarks declare an interest because between 1968 and 1970 I worked for Chrysler and when I left the firm in 1970 I was company solicitor.
At the heart of the Government's proposals is the intention to shuffle production lines. I find this a remarkable suggestion because it is no simple matter. There is now a successful production line at Ryton producing a range of cars and it would be difficult to move this line to Linwood. It is not on all fours with moving a caravan but is more equivalent to moving a house. It means taking the plant to pieces brick by brick and reassembling it elsewhere. It is a peculiar suggestion that the Government should wish to demolish the production line and to build it elsewhere.
In 1969 Chrysler decided not to produce a new model in this country. The proposal at that time was that Chrysler would build the 1800 model in this country. That model was designed and the production tools were made in the United Kingdom. It was decided at a late stage to switch production from the United Kingdom to France, and an important factor in the consideration was the labour difficulties being experienced in the United Kingdom Chrysler factories.
The Government are now proposing to use taxpayers' money to invest where Chrysler has not chosen to invest since 1969. Apparently Chrysler is to give undertakings on output and exports, but what happens when Chrysler falls down on these undertakings, as I believe it will? Chrysler gave under-takings to continue the British enterprise when it took over from Rootes and we have seen the value of those undertakings.
The Government are effectively going into the car sales business because they will need to ensure that the production of Chrysler is sold. But the Government will be competing with themselves because they are already in this business through British Leyland.
I believe that Chrysler should be allowed to do its worst and that the Government should then deal with the resulting problem on a piecemeal basis. I do not believe that this will result in 25,000, 50,000 or 70,000 people being made unemployed. It will simply mean that Chrysler has decided not to continue with its factories. But the factories and the work force will remain and it will be for the Government to decide how to apply the money to minimise the damage. I believe that £162 million could be better spent on minimising damage on a piecemeal basis rather than propping up this American multinational company.
The Luton-Dunstable plant producing Commer and Dodge trucks and vans has had a reasonably successful and profitable history and will remain viable. The Ryton assembly plant is currently producing Avenger cars and there is no reason why it should not continue to do so, perhaps as part of a different organisation. The Stoke engine plant is substantially responsible for the CKD—completely knocked down—parts which are the subject of the Iranian Peykan project. I see no reason why this contract should not continue whether or not it is ultimately controlled by Chrysler Corporation.
There remains of the major plants only Linwood, producing Hunters and Imps. The Hunter is a reasonably successful car which is not capable of further development. It is unexciting and unlikely to have a substantial future. The Imp range has never achieved great success. The limitations of the chassis and design have marked it for some years as a model range that needs replacement.
When the move to Linwood was first contemplated there might have seemed some arguments of industrial synergy because of the location of the Pressed Steel Fisher factory on the same industrial estate. As motor vehicle assembly plants have become larger and the production methods more sophisticated, it has become increasingly advantageous for production to be concentrated in one area where components can be conveniently

assembled without transport difficulties. Linwood has been bedevilled by the inconvenience of moving chasis and components from the main components manufacturing area in the Midlands to Scotland.
With the benefit of hindsight, it is easy to see that the decision to open a motor assembly plant at Linwood was a mistake. There is a further reason for this. To a legendary extent the work force at Linwood are regarded as bloody-minded and belligerent and the Chrysler management responded by putting in its most aggressive management with its obvious result: bad labour relations. It is not for me to say whether the reputation of the plant is or is not fair, but anyone proposing to invest money in car production in that area should take the background into account. There can be no sufficient justification for demolishing the car production line in the Midlands for the purpose of propping up a plant that is not being successful.
The Chancellor of the Duchy of Lancaster is sometimes referred to as a financial wizard who descends deus ex machina to produce rabbits from hats. I am afraid that on this occasion he has not only produced a lame duck but has gilded it with taxpayers' money. Tied round its neck is a brick because it is certain to sink rapidly to the bottom of the pond.

9.10 p.m.

Mr. Tom King: The speech made by my hon. Friend the Member for Gosport (Mr. Viggers), who has an intimate personal knowledge of Chrysler and a keen interest in the motor industry, reflects the high standard of the speeches from this side of the House. Several of my hon. Friends have close constituency interests, including my hon. Friends the Members for Bromsgrove and Redditch (Mr. Miller) and Bedfordshire, South (Mr. Madel). Some of my hon. Friends were members of the Select Committee which studied the industry, and to their contributions hon. Members must attach particular importance. I am sorry that the hon. Member for Sheffield, Attercliffe (Mr. Duffy) is not back in his place, but many hon. Members paid tribute to him for his chairmanship of the Select Committee. In that he was nobly supported by my right hon. Friend the Member for Bournemouth, West (Sir J. Eden),


my hon. Friend the Member for Tiverton (Mr. Maxwell-Hyslop) and others. The knowledge which they brought from their study has gone some way towards minimising the culpable sabotage attempted by the Government.
I cannot be within recollection that any other report crucial to a debate should have been produced grudgingly and with great difficulty at 11 o'clock on the morning of the debate. Many hon. Members are in Standing Committee until one o'clock and they had from then until 3.30 p.m. to study the extremely important CPRS Report. We have not been told why the Report was not made available more promptly. The Report is dated November and bulk copies were available in November. Yet not until 11 o'clock this morning was it made available to us.
We received pledges from the Lord President and the Minister of State, Department of Industry, who recognised that it was essential that the Report should be available for any debate on the motor industry. Not only was that Report grudgingly produced only two hours before the debate, but no reply was given by the Government to the Select Committee Report, despite Ministers having said that a reply would be needed for any debate on the motor industry.
The only compensation the Opposition have is that they can at least turn to The Sunday Times for the complete details of the Chrysler deal. The extracts given in The Sunday Times are correct in each specific detail. It is ironic that after this debate we shall move on to censure and exclude from the House two journalists who produced an advance copy of a Select Committee document. It could be argued that dissident Cabinet Ministers who leaked the contents of the Chrysler Report might be similarly excluded from the House for six months.
The Government are guilty of gross contempt of the House when it is considering the most important industry in the country, an industry employing 1½ million people and representing 10 per cent. of the total industrial production of the country. There have been criticisms of the faults and failings of the motor industry, but it would be wrong to let the debate go by without recognising the considerable ability, ingenuity and

achievement of the car industry. To quote from the Select Committee's Report:
United Kingdom manufacturers are adept at making specialist vehicles of all sorts and selling them both at home and abroad. Their products include armoured cars and light tanks, fire engines, agricultural tractors, heavy trucks, bus and coach chassis and medium weight trucks made by mass production at some of the lowest unit costs in the world. British expertise in the manufacture of trucks and diesel engines has made this country the United States multi-nationals' major overseas design centre for such vehicles and equipment.
There are many aspects of the motor industry that we respect, particularly the strength and skill of the component industry. Some hon. Members may have managed to read as far as the pages about the export achievement of the component companies and their profit records. For example, Lucas, GKN and others have managed in extremely difficult conditions to trade very effectively and to do great work for this country with their export earnings.
But it is inevitable that the debate will dwell on the difficulties. We have been privileged to have, even if with little notice, the Select Committee and CPRS Reports. All sorts of pet answers have been given to the problems of the motor car industry. Any fair observer will recognise that the whole industry is in a vicious circle, and it would be wrong to allocate total blame in any one direction. Low output and low profits have led to low investment, leading to further low output and further low profits. The industry has become stuck in that situation.
The industry has also been hit hard by Government policy. Both sides of the House must face the criticism made by the Select Committee and the CPRS. The Select Committee went so far as to say that it believed that Government interference had destroyed the will to invest in the industry. That might seem a little extreme, but within the past 14 years—and therefore both parties must share responsibility there have been 24 changes of Government policy directly affecting the industry. When one appreciates that, one can understand the grounds on which the Select Committee made that allegation.
What is clear from a study of the Reports is that no bogy can easily be found. Hon. Members have tried to pretend that multi nationals were the cause


of the problems. The right hon. Member for Lanark (Mrs. Hart) had a swipe at transfer pricing. She found that the nub of the matter was transfer pricing from Chrysler to its Swiss subsidiary by which Mr. Riccardo has been siphoning out millions of pounds that no one else knows anything about. That might be true. I am not in a position to tell, though it would be in breach of the Exchange Control Act. It could be happening, but one thing makes me wonder whether it is. If the sums were as large as has been suggested, if it were such a successful way of siphoning out profits, I wonder why Mr. Riccardo was willing to give the whole Chrysler operation in the United Kingdom, lock, stock and barrel, to the Government—and with a sweetener of £35 million.

Mr. Buchan: The hon. Gentleman has posed one question and answered another. It is one think to ask "Why is Mr. Riccardo willing to give this us?" It is another thing to say that transfer pricing was or was not applied. All the evidence is that Chrysler was selling its cars to the Switzerland subsidiary at a very low mark-up, and that the price from Switzerland was high so that Chrysler could take advantage of the special tax concessions for foreign firms there. We believe that the sums run into several millions. If the hon. Gentleman cannot deny it, he should not raise it.

Mr. King: I am not sure whether the hon. Gentleman was here when his right hon. Friend the Member for Lanark made this point, when she was questioning whether Chrysler was as unviable as had been said. She suggested that transfer pricing was the great secret that the Government had not stumbled on and that the whole viability of Chrysler would be transformed if only this magic chest could be unlocked. As I suggested just now, if that were the case, I do not think that Mr. Riccardo would have offered the business to the Government plus a gift of £35 million.
The Select Committee and the CPRS have made their comments. What will worry everyone who is concerned about employment is that one of the findings of the Select Committee is that there are too many car companies, and it goes on to say that there is 25 per cent. excess capacity in Europe and that by the very best and

most optimistic case which can be made, by 1981 only 80 per cent. of Europe's existing capacity will be utilised.
There is the threat of a reduction of employment in the medium term of 55,000 if we are to secure long-term employment. If that is not done, there is a real threat of a loss of jobs on a scale approaching 275,000 by 1985. Those are the figures given in the CPRS Report, and they make extremely sombre reading.
The Report goes on to say that the industry in this country cannot break even below 1·8 million units, let alone make any allowance for further investment. At the moment, we are producing 1·3 million. On the very best case that can be made, only by 1980 are we likely to be producing the 1·8 million units needed merely to break even.
There are other aspects to which the CPRS draws attention. One is the growth of Japan and the very measured approach of Japan to the British market which is now in a position to expand considerably both here and in Europe. If Japan expands into Europe, we have the threat of increased European pressure on this country. Added to it we have the threat of the Spanish industry. There is also the threat of the Eastern European industry where there are now Fiat factories in Poland and Russia. It will not have escaped the notice of hon. Members that there is on sale in this country a 1500 cc Polish-made Fiat at exactly the same price as an 825 cc British Mini. What is more, Russian rates of inflation, whatever they may be, are more under control than the Secretary of State can lay credit to for his Government. That is not likely to improve the situation.
When we look ahead to the Iranian contract and discuss it in the Chrysler situation, how much confidence can we have in the continuity of that contract? In any event, even if it continues, the plans of the Iranians are to ensure 100 per cent. local content by 1981. This is a very poor basis on which to plan ahead.
Against this background, we have the Government's first bite at their strategy with Leyland, and it is a worrying situation. That has been savaged by the unanimous Report of the Select Committee. When we consider the conclusions reached by the Ryder Committee and adopted by the Government, on mature reflection and in the light of the


points made by the Select Committee, some of them look terrifying.
The implication of the investment programme in Leyland is that out of its earnings Leyland will generate half the money needed for the investment. How can anyone believe that it will produce El.4 billion of the £2–8 billion required for the investment scheme? Is it realised that the other aspect required under the Ryder strategy is that for Leyland to achieve the objectives laid down in the Ryder Report it will have to become, by 1985, the most profitable car company in Europe? Obviously we look for a recovery in Leyland, and we hope that it will succeed. But can we plan prudently and intelligently on the basis that it will become the most profitable car company in Europe, given the difficulties that it faces at the moment?
Having seen the Leyland approach of the Government and the Ryder strategy, we were told that the Government had a new strategy, outlined in the document called "An Approach to Industrial Strategy". It was launched at Chequers with all the fanfare and a Press conference. It seems to have died a remarkably quick death. I had an embarrassing experience when I was virtually assured in the Vote Office, where I went for a further copy, that it had never actually been issued. It is not recorded in the Vote Office. I was not aware that the Vote Office exercised any critical judgment of the quality of documents that it receives, but obviously it has decided that this one is of such transient interest that it should no longer be filed. It was with great difficulty that I finally succeeded in obtaining a copy.
Of course, there might be another Cabinet Minister who made it his business to see that all known copies were withdrawn—

Mr. Heseltine: Yes, there he is, on the Front Bench.

Mr. King: We are pleased to welcome the Chancellor of the Duchy of Lancaster, who no doubt has the copies carefully stashed away for recycling.
One can understand why this document might have been buried, because it set out the criteria by which to judge the main faults of British investment in the

past. If one were about to announce a Chrysler decision of the kind that we have had, would one like to be told that among the faults and problems was an inefficient use of capital which has resulted in a relatively poor return, or that one of the faults was a poor choice of investment and that one of the more difficult factors was a limited supply of labour on which manufacturing industry could draw? That was a conclusion of the Government only a month ago. The Secretary of State for Employment looks surprised to hear it, but I know that it was an initiative of other Departments.
It was a strategy based on the principle of no lame ducks, I remember. We had a new phrase—"wounded heroes". It may have surprised some of my hon. Friends to know who would be cate-gorised as a wounded hero. It must have surprised Mr. Riccardo even more to be greeted by the Chancellor of the Duchy with the words. "Whatever the Secretary of State for Industry may say, to me you are a hero." God knows, they were wounded. With a loss of £430 million in the previous 10 years, there was no doubt about that. But the heroism might be more difficult to observe.
Of course, the whole Government strategy was to look at the problems and say, "In future, we must encourage investment based on accurate sectoral analysis to show where investment should go." And the first sectoral analysis that we had from the Government was presumably the CPRS Report. If ever there was a sectoral analysis which clearly said, "Do not put a penny there," it must be this CPRS Report.
Then we advance to the actual decisions on Chrysler. We move on to the implications of those decisions. I am pleased to see present the hon. Member for Sheffield. Attercliffe because he and his Select Committee drew attention to the point which must be made, that this is not just a decision for Chrysler or the British motor industry. It is a decision for the whole of British industry, about where the funds will go and where effort will be made and encouragement given.
I do not know whether the Secretary of State heard the attack on the declaration of intent by his hon. Friend the Member for Basildon (Mr. Moonman), who was backed by a number of other Labour Members. The declaration is


amazingly vague. There appears to be no real commitment and nothing to stop Chrysler upping sticks in a year or two depending on how the market goes. The figures quoted by the hon. Member for Colne Valley (Mr. Wainwright) suggested that Chrysler might pick up for a year or two and that then its profit performance was likely to fall again. If that is right, it is likely that we shall see the third declaration of intent from Chrysler by about 1980.
But the seriousness of this declaration is that it spells out clearly how the damage will be done. I have said that the danger of the payment to Chrysler is its impact on other companies in the motor industry, particularly Vauxhall and Ford. I wonder how Vauxhall and Ford will react to the first paragraph of the declaration of intent, which says:
Her Majesty's Government and Chrysler Corporation have reached agreement on the broad terms on which Chrysler and Her Majesty's Government will co-operate to strengthen Chrysler United Kingdom Limited, so as to maximise the opportunities for growth of Chrysler United Kingdom in their mutual interest and for the benefit of Chrysler United Kingdom's employees, dealers and customers".
How can they do that except at the expense of the Vauxhall dealers and at the expense of the Vauxhall and Ford employees? The British Government are now committed. Therefore, when Vauxhall sees what has happened and asks why it should be left out of the club—and in its present difficult financial situation in which it faces losses it will be impossible for the Government to resist—what will the Government do? What will the Government say to Ford when it asks why it should be the only unsubsidised car company in the country?
The tragedy of unemployment is an option which cannot be bought out in any way. The Chief Secretary to the Treasury has given the answer better than anybody. He said:
Even if money was available—it is not—when we are already borrowing £9,000 million, bailing out unviable companies cannot in the long run save jobs.
That is the point. The Government are attempting to bail out and are spending money wastefully. The cost is £10,000. per job.
Why not tackle the problem in the way in which the last Conservative Government tackled it with the wool textile

scheme which symbolically ended yesterday? In that case £15 million worth of investment in the form of grants encouraged £60 million of investment from companies and helped to secure 60,000 jobs. There was £15 million of Government money. It worked out at £250 a job. If there are viable areas where companies will put up their own money with encouragement from Government, that is surely a much more satisfactory way to go about the problem.
Our criticism of the Government is the overriding fault found by the Select Committee in its study of the industry, which said that the problem was one of attitude. It is not a question of just unions, just management or just lack of investment. Above all it is a question of total commitment in people's attitudes throughout the industry. That is what must change. The tragedy of the Government's approach is that it is positively hindering and handicapping the efforts which are made in these companies where the attitude might change.
The Government still have to get union acceptance of 8,000 redundancies. There must be new manning levels and agreement on a level of productivity similar to that of French Chrysler. We have no information from the Government whether they have any undertaking about this. We should like to hear whether there is an undertaking.
The Labour Government have changed course completely over this issue. The Secretary of State for Industry has been absent for the whole of the debate apart from his opening speech and that of my hon. Friend the Member for Henley (Mr. Heseltine). We understand why he was absent and we sympathise with him. It was significant that when my hon. Friend said that the Chancellor of the Duchy of Lancaster had negotiated behind the back of the Secretary of State for Industry there was a cry of "Rubbish".

Mr. Lever: Rubbish.

Mr. King: The interesting point is—we have heard it again—that that cry came from the Chancellor of the Duchy of Lancaster and not from the Secretary of State for Industry.

Mr. Lever: rose—

Hon. Members: Let him say it.

Mr. King: I am sorry, I have to complete my speech soon.

Mr. Varley: The hon. Gentleman has made a totally unwarranted attack on my right hon. Friend. I hope that he will withdraw it. The negotiating team consisted of my right hon. Friends the Secretary of State for Scotland, the Chancellor of the Duchy of Lancaster and the Paymaster-General. I led the negotiations. I hope that the hon. Gentleman will not perpetuate this myth and total distortion.

Mr. King: I meant no attack on the Chancellor of the Duchy. I appreciate the intervention of the Secretary of State and am glad that he has made this point clear. The facts are as I stated. He did not contradict me. [HON. MEMBERS: "Withdraw."] The Secretary of State for Industry ended his speech with the cry, "What sort of Labour Government would we be if 60,000 jobs did not matter?" I will tell the Secretary of State. It is the sort of Labour Government who fought the election on the slogan "Back to work with Labour" the sort of Labour Government who have now added 750,000 to the unemployment queue and are adding to it at the rate of 35,000 a month. With the industrial strategy put forward by the right hon. Gentleman today the Government will add to those figures at an ever-increasing rate.

9.36 p.m.

The Secretary of State for Scotland (Mr. William Ross): The hon. Member for Bridgwater (Mr. King) began his speech on a much higher tone than some speeches we have heard today. He highlighted the importance to this country of the motor car industry. The fact that 300,000 people are directly employed in that industry with another 1 million people working for it indirectly through supply industries, components and services and the rest, must show the importance that it holds for us.
There was an element of frivolity about some of the speeches and the attitudes of Conservative Members who failed to appreciate what we were talking about—the livelihood of men and women who will be directly affected by our decision tonight. I wonder what would have been the reaction from the Conservatives if we had come forward today and said,

"Chrysler is being liquidated and the Government are doing nothing about it." What would have been the attitude of the Scottish Tory Members of Parliament—

Mr. Lawson: You nearly said it—Scottish nationalists.

Mr. Ross: Every single one of them would have been on his feet protesting. The hon. Member for Henley (Mr. Heseltine) started to tell us that the great aim of the Tory Party in 1970 when it came into office was to cut down unemployment.

Mr. Peter Rost: How are you doing?

Mr. Ross: Let us see what happened. Have we forgotten UCS? Have we forgotten that the Tory Government decided that they would give no more help to UCS—that it was to be butchered? That was the phrase used. We had months of agony and changes of policy that eventually led the Government to change their mind. What happened? By January 1972 unemployment in Scotland was 150,000—

Mr. Rost: What is it now?

Mr. Ross: Less than 127,000. For 17 months, in the early 1970s, it was never lower than 127,000. That is why the Tory Party has no political base in Scotland.
The hon. Member for Gosport (Mr. Viggers) came to the conclusion that there should never have been a motor car industry at Linwood. There were not many hon. Members in the Chamber at the time that he said that. The Conservative Government took Rootes to Linwood. Phase 1 was in 1962 and Phase 2 was not completed until 1965. One hon. Member asked earlier about the cost of the Chrysler agreement per job, but did hon. Members opposite work out the cost per job in respect of that exercise? It must have been much higher. The Opposition thought it was important then to save jobs, but today they think it is important to kill those jobs. That is the alternative and they must face up to it. We either accept the plan now before us, or we accept that nearly 60,000 jobs, direct and indirect, will be lost, including 12,000 at Linwood.

Mr. Rost: They will go, anyway.

Mr. Ross: The hon. Gentleman is simply showing his lack of faith in the motor car industry in this country.

Mr. Patrick Mayhew: Will the right hon. Gentleman explain to the House why the CPRS Report begins with a Government note that the Report was being published as a contribution to public discussion on these difficult issues?
Why was its publication held up so long, which means that it can no longer make a proper contribution to this debate?

Mr. Ross: The Report has been published for public discussion. The discussion has hardly begun, and it will not end with tonight's debates. I have known many reports that have been accepted by Governments at the time, and I can assure hon. Members that they proved in the event to be quite wrong in some of their projections. We have produced this Report and we have published it, and that is more than the Conservative Government did with any of their Reports from the CPRS. Some hon. Members have said that we should have produced the Report earlier, but if we had produced it six days later they would have said we published it too late. The Government just cannot win. We have shown much more courage than the Conservative Government did, and we welcome the discussion that has taken place.
The Opposition today were writing off Chrysler. The hon. Member for Colne Valley (Mr. Wainwright) was for closing down Longbridge, Cowley and Linwood, and others were writing off British Leyland altogether. Where does all this defeatism end?
There are problems in the industry, not only in this country but in the whole of the Western world. One of the points dealt with by the CPRS Report is that action ought to be taken at a Community level. The CPRS suggested that we should turn our attention to the level of imports coming from Japan and develop a Community effort. If we start trying to solve our problems in the way that the Opposition did when in government, we shall not solve them: we shall fill this country with foreign cars.

Mr. Lawson: I realise that Ministers have difficulties in reconciling their differences

in Cabinet, but will the right hon. Gentleman at least reconcile his difference with the Secretary of State for Industry who, in contradistinction, said that unemployment would have to come in the motor industry. He said that there should not be an amputation of Chrysler, but that the unemployment should be spread throughout the whole industry. Now the Secretary of State for Scotland says that there will be no reduction in manning.

Mr. Ross: My right hon. Friend said that the restructuring of British Leyland had already cost 28,000 jobs. He pointed out that what has been proposed in this scheme is a contraction or slimming down, by restructuring, of about 25 per cent. That is precisely what should be done, not simply a reaction to the situation by saying that 25,000 Chrysler jobs should go, even though that might mean that the viable commercial vehicle sector at Dunstable would be closed down as well.

Mr. Lawson: Nobody is saying that.

Mr. Ross: Hon. Members were today advocating the complete liquidation of Chrysler, and they cannot avoid the inevitable implications of that. I shall certainly not let them off the hook on that one.
The speech by the hon. Member for Henley completely lacked humanity.

Mr. John Peyton: Rubbish.

Mr. Ross: The hon. Member for Henley should be condemned for the kind of speech he made. He said that the money would be better used looking after employment. I hope that he will listen to the right hon. Member for Renfrewshire. East (Miss Harvie Anderson). The hon. Gentleman should consider what is happening in Scotland in the endeavour to get new industry in. We are in the middle of a recession, whether he realises it or not. At this time it is difficult to get mobile industry, and to suggest that it can be got at a stroke, even a stroke that lasts over a year, is rubbish. The CPRS Report talked about it taking five years to redeploy those laid off. The right hon. Lady will tell the hon. Member for Henley how difficult these things are in the West of Scotland. No wonder her speech contrasted so markedly with his.


She has to live with the problems, as does my hon. Friend the Member for Renfrew-shire West (Mr. Buchan).

Mr. Richard Wainwright: And the hon. Member for Basildon (Mr. Moonman).

Mr. Ross: I shall come to my hon. Friend the Member for Basildon (Mr. Moonman). I have dealt with the hon. Member for Colne Valley. Defeat is written all over his face.
I regret the sloganising attitude of the Opposition, who seem to think there is an easy way out of all of this. They seem to believe that we should let Chrysler go, but if they believe that they must face up to what the cost would be. One of my hon. Friends was describing exactly what it would mean if, instead of spending the money on Chrysler, we spent it on roads and on other services.
If we let Chrysler go, the immediate cost will be that of unemployment benefit and earnings related benefit. It will also be the cost to the country of the loss of taxable revenue. My right hon. Friend the Secretary of State gave the total cost as being between £100 million and £150 million. It is the consequences of this to the nation that the hon. Member for Bridgwater slid over easily. There is no doubt that the cost of this operation is as nothing compared to what we should have to pay in the first year if we followed the policies that are advocated by Conservative Members.

Mr. Michael Brotherton: rose—

Mr. Ross: All the points that have been made by Opposition Members, including their sneering at the possible future for Chrysler, are in contrast to what was said when Chrysler went to Linwood.

Mr. Brotherton: rose—

Mr. Ross: Only two years after Chrysler moved to Linwood, Rootes was in trouble.

Mr. Brotherton: rose—

Mr. Ross: Hon. Gentlemen should appreciate that we are dealing with a serious situation. It is a situation that costs jobs and affects the balance of payment.

Mr. Brotherton: rose—

Mr. Speaker: Order. It is quite clear that the right hon. Gentleman will not give way. The hon. Member for Louth (Mr. Brotherton) must not rise again.

Mr. Ross: I am surprised at Opposition Members ignoring the importance of the balance of payments. The hon. Member for Bridgwater paid tribute to what the motor car industry had done. The people employed by Chrysler have done their share too. The Iranian contract is a valuable asset to this country. Some hon. Gentleman said that it could have been dealt with in another way. It could not. If Chrysler goes, that goes. We shall lose not only £165 million which would assist our balance of payments, but we shall have to deal with the aftermath, the gap into which foreign cars will race. The hon. Gentleman said that the motor car industry in Britain could not fill the gap. It will be filled, but at the expense of our balance of payments. The cost to the balance of payments in terms of jobs and the cost of the Iranian contract is something which hon. Gentlemen have not reckoned with.
Some of my hon. Friends questioned whether this was the best way of dealing with the matter. My right hon. Friend the Member for Lanark (Mrs. Hart) referred to this, as did other of my hon. Friends. We examined several ways of dealing with the matter, but I can assure my hon. Friends who were worried about the cost that it would have been much greater if we had chosen a different solution and would have left the Government with open ended commitments which they were not prepared to share.
I shared, as I am sure many hon. Members who are concerned with the motor car industry and in particular with Chrysler shared, the horror at the way this was sprung upon us. That was implicit in some of the remarks that were made in the debate. However, we have to face the facts and find a solution. We believe that this solution is the best one. What does it achieve? [HON. MEMBERS: "We cannot hear."] I suggest that if hon. Gentlemen cannot hear they start listening. What does it achieve? Production will continue at Dunstable.
I was asked about the likely number of redundancies that there would be at Dunstable. The ultimate number of


redundancies at Dunstable and Luton will be 400. Production will continue at Ryton with the Simca car. It will continue at Stoke with the Iranian contract. Production of spare parts at Birmingham continues. Production continues at Linwood.
Comparing what we have achieved out of this with the reality of what faced us at the start, I think that the Government ought to be commended for the kind of deal that we got.
The speech of my hon. Friend the Member for Nuneaton (Mr. Huckfield) was a balanced one. He weighed all the dilemmas and came down on the Government's side. My hon. Friend the Member for Basildon was not quite so balanced—I am sorry to say. He said that we had put Chrysler at the top of the queue. I assure him that we did not put Chrysler at the top of the queue. The events were forced upon us. We have dealt with them with humanity and with efficiency. We have dealt with them. We are satisfied that unless we are given the good will and the kind of industrial relations that we must get over the whole motor car industry—not just Chrysler, because this applies to British Leyland, Fords and Vauxhall; if hon. Members are so beloved of the CPRS Report, it is there—unless we get that new attitude, there is no hope at all for the motor car industry. I am satisfied that we can get it.

Mr. John Stonehouse: I respect the sincerity of my right hon. Friend the Secretary of State in wishing to protect jobs in Scotland, but may I ask what his position will be when Ford

and Vauxhall come forward, perhaps next year, for a subsidy to maintain jobs in England?

Mr. Ross: It may well be that we shall take half of their profits, as, indeed, we are prepared to take half the profits of Chrysler.
My hon. Friend the Member for Basildon said that the declaration of intent was a "scandalous sell-out". I do not know how he can look at this matter in a balanced way and look at the question of employment and describe it as a sell-out. The declaration of intent is far more specific than that of 1967, and some of the questions about which my hon. Friend was concerned I, too, was concerned about. There is to be a planning agreement. That, I think, should give us a certain measure of control and information that we never had previously. There will also be Government-appointed directors on the board, and hon. Members should remember that our loans are backed either by the Chrysler Corporation in America or against the assets of that company in the United Kingdom.
Taking into consideration all these advantages and the whole question in respect of employment, the point that I must make to all Scottish hon. Members is that if they vote against us tonight they are voting for unemployment in Scotland such as they have never had previously.

Question put, That this House do now adjourn:—

The House divided: Ayes 260 Noes 285.

Division No. 17.]
AYES
[10.0 p.m.


Aitken, Jonathan
Braine, Sir Bernard
Cordle, John H.


Alison, Michael
Brittan, Leon
Cormack, Patrick


Amery, Rt Hon Julian
Brocklebank-Fowler, C.
Costain, A. P.


Arnold, Tom
Brotherton, Michael
Critchley, Julian


Atkins, Rt Hon H. (Spelthorne)
Brown, Sir Edward (Bath)
Crouch, David


Awdry, Daniel
Bryan, Sir Paul
Crowder, F. P.


Baker, Kenneth
Buchanan-Smith, Alick
Davies, Rt Hon J. (Knutsford)


Banks, Robert
Buck, Antony
Dean, Paul (N Somerset)


Beith, A. J.
Bulmer, Esmond
Dodsworth, Geoffrey


Bell, Ronald
Burden, F. A.
Douglas-Hamilton, Lord James


Bennett, Dr Reginald (Fareham)
Butler, Adam (Bosworth)
Drayton, Burnaby


Benyon, W.
Carlisle, Mark
du Cann, Rt Hon Edward


Berry, Hon Anthony
Carr, Rt Hon Robert
Durant, Tony


Biffen, John
Chalker, Mrs Lynda
Eden, Rt Hon Sir John


Biggs-Davison, John
Churchill, W. S.
Edwards, Nicholas (Pembroke)


Blaker, Peter
Clark, Alan (Plymouth, Sutton)
Elliott, Sir William


Body, Richard
Clark, William (Croydon S)
Emery, Peter


Boscawen, Hon Robert
Clarke, Kenneth (Rushcliffe)
Eyre, Reginald


Bottomley, Peter
Cockcroft, John
Fairbairn, Nicholas


Bowden, A. (Brighton, Kemptown)
Cooke, Robert (Bristol W)
Fairgrieve, Russell


Boyson, Dr Rhodes (Brent)
Cope, John
Farr, John




Fell, Anthony
Knox, David
Renton, Tim (Mid-Sussex)


Fisher, Sir Nigel
Lamont, Norman
Ridley, Hon Nicholas


Fletcher, Alex (Edinburgh N)
Lane, David
Ridsdale, Julian


Fletcher-Cooke, Charies
Langford-Holt, Sir John
Rifkind, Malcolm


Fookes, Miss Janet
Latham, Michael (Melton)
Rippon, Rt Hon Geoffrey


Fowler, Norman (Sutton C'f'd)
Lawrence, Ivan
Roberts, Michael (Cardiff NW)


Fox, Marcus
Lawson, Nigel
Roberts, Wyn (Conway)


Fraser, Rt Hon H. (Stafford &amp; St)
Lestor, Jim (Beeston)
Rodgers, Sir John (Sevenoaks)


Freud, Clement
Lewis, Kenneth (Rutland)
Ross, Stephen (Isle of Wight)


Fry, Peter
Lloyd, Ian
Rossi, Hugh (Hornsey)


Galbraith, Hon. T. G. D.
Loveridge, John
Rost, Peter (SE Derbyshire)


Gardiner, George (Reigate)
Luce, Richard
Royle, Sir Anthony


Gardner, Edward (S Fylde)
McAdden, Sir Stephen
Sainsbury, Tim


Gilmour, Rt Hon Ian (Chesham)
McCrindle, Robert
St. John-Stevas, Norman


Gilmour, Sir John (East Fife)
Macfarlane, Neil
Scott, Nicholas


Glyn, Dr Alan
MacGregor, John
Shaw, Giles (Pudsey)


Godber, Rt Hon Joseph
Macmillan, Rt Hon M. (Farnham)
Shelton, William (Streatham)


Goodhew, Victor
McNair-Wilson, M. (Newbury)
Shepherd, Colin


Goodlad, Alastair
McNair-Wilson, P. (New Forest)
Shersby, Michael


Gorst, John
Marshall, Michael (Arundel)
Silvester, Fred


Gow, Ian (Eastbourne)
Marten, Neil
Sims, Roger


Gower, Sir Raymond (Barry)
Mates, Michael
Sinclair, Sir George


Grant, Anthony (Harrow, C)
Mather, Carol
Skeet, T. H. H.


Gray, Hamish
Maude, Angus
Smith, Cyril (Rochdale)


Grieve, Percy
Maudling, Rt Hon Reginald
Smith, Dudley (Warwick)


Griffiths, Eldon
Mawby, Ray
Speed, Keith


Grimond, Rt Hon J.
Maxwell-Hyslop, Robin
Spence, John


Grist, Ian
Mayhew, Patrick
Spicer, Michael (S Worcester)


Grylls, Michael
Meyer, Sir Anthony
Sproat, Iain


Hall, Sir John
Miller, Hal (Bromsgrove)
Stainton, Keith


Hall-Davis, A. G. F.
Mills, Peter
Stanbrook, Ivor


Hamilton, Michael (Salisbury)

Stanley John


Hampson, Dr Keith
Miscampbell, Norman
Steel, David (Roxburgh)


Hannam, John
Mitchell, David (Basingstoke)
Steen, Anthony (Wavertree)


Hastings, Stephen
Moate, Roger
Stewart, Ian (Hitchin)


Havers, Sir Michael
Monro, Hector
Stokes, John


Hawkins, Paul
Montgomery, Fergus
Stradling Thomas J.


Hayhoe, Barney
Moore, John (Croydon C)



Heath, Rt Hon Edward
More, Jasper (Ludlow)
Tapsell, Peter


Heseltine, Michael
Morgan, Geraint
Taylor, R. (Croydon NW)


Hicks, Robert
Morris, Michael (Northampton S)
Taylor, Teddy (Cathcart)


Higgins, Terence L.
Morrison, Charles (Devizes)
Tebbit, Norman


Holland, Philip
Morrison, Hon Peter (Chester)
Temple-Morris, Peter


Hooson, Emlyn
Mudd, David
Thatcher, Rt Hon Margaret


Hordern, Peter
Neave, Airey
Thorpe, Rt Hon Jeremy (N Devon)


Howe, Rt Hon Sir Geoffrey
Nelson, Anthony
Townsend, Cyril D.


Howell, David (Guildford)
Neubert, Michael
Trotter, Neville


Howells, Geraint (Cardigan)
Newton, Tony
Tugendhat, Christopher


Hunt, John
Nott, John
van Straubenzee, W. R.


Hurd, Douglas
Onslow, Cranley
Vaughan, Dr Gerard


Hutchison, Michael Clark
Oppenheim, Mrs Sally
Viggers, Peter


Irvine, Bryant Godman (Rye)
Page, John (Harrow West)
Wainwright, Richard (Colne V)


Irving, Charles (Cheltenham)
Page, Rt Hon R. Graham (Crosby)
Wakeham, John


James, David
Pardoe, John
Walder, David (Clitheroe)


Jenkin, Rt Hon P. (Wanst'd &amp; W'df'd)
Pattie, Geoffrey
Walker, Rt Hon P. (Worcester)


Jessel, Toby
Penhaligon, David
Walters, Dennis


Johnson Smith, G. (E Grinstead)
Percival, Ian
Weatherill, Bernard


Johnston, Russell (Inverness)
Peyton, Rt Hon John
Wells, John


Jones, Arthur (Daventry)
Pink, R. Bonner
Wiggin, Jerry


Jopling, Michael
Price, David (Eastleigh)
Winterton, Nicholas


Joseph, Rt Hon Sir Keith
Prior, Rt Hon James
Wood, Rt Hon Richard


Kershaw, Anthony
Pym, Rt Hon Francis
Young, Sir G. (Ealing, Acten)


Kilfedder, James
Raison, Timothy
Younger, Hon George


Kimball, Marcus
Rathbone, Tim



King, Evelyn (South Dorset)
Rawlinson, Rt Hon Sir Peter
TELLERS FOR THE AYES:


King Tom (Bridgwater)
Rees, Peter (Dover &amp; Deal)
Mr. Spencer Le Marchant and


Kitson, Sir Timothy
Rees-Davies, W. R.
Mr. Cecil Parkinson.


Knight, Mrs Jill
Renton, Rt Hon Sir D. (Hunts)





NOES


Abse, Leo
Bennett, Andrew (Stockport N)
Callaghan, Jim (Middleton &amp; P)


Allaun, Frank
Bidwell, Sydney
Campbell, Ian


Anderson, Donald
Bishop, E. S.
Canavan, Dennis


Archer, Peter
Blenkinsop, Arthur
Cant, R. B.


Armstrong, Ernest
Boardman, H.
Carmichael, Neil


Ashley, Jack
Booth, Albert
Carter, Ray


Ashton, Joe
Bottomley, Rt Hon Arthur
Carter-Jones, Lewis


Atkins, Ronald (Preston N)
Boyden, James (Bish Auck)
Cartwright, John


Atkinson, Norman
Bradley, Tom
Castle, Rt Hon Barbara


Bagier, Gordon A. T.
Bray, Dr Jeremy
Clemitson, Ivor


Bain, Mrs Margaret
Brown, Hugh D. (Provan)
Cocks, Michael (Bristol S)


Barnett, Rt Hon Joel (Heywood)
Brown, Robert C. (Newcastle W)
Cohen, Stanley


Bates, Alf
Buchan, Norman
Coleman, Donald


Bean, R. E.
Buchanan, Richard
Colquhoun, Mrs Maureen


Benn, Rt Hon Anthony Wedgwood
Butler, Mrs Joyce (Wood Green)
Conlan, Bernard







Cook, Robin F. (Edin C)
Jenkins, Rt Hon Roy (Stechford)
Roberts, Gwilym (Cannock)


Corbett, Robin
John, Brynmor
Robertson, John (Paisley)


Cox, Thomas (Tooting)
Johnson, James (Hull West)
Roderick, Caerwyn


Craigen, J. M. (Maryhill)
Johnson, Walter (Derby S)
Rodgers, George (Chorley)


Crawford, Douglas
Jones, Alec (Rhondda)
Rodgers, William (Stockton)


Cronin, John
Jones, Barry (East Flint)
Rooker, J. W.


Crosland, Rt Hon Anthony
Jones, Dan (Burnley)
Rose, Paul B.


Cryer, Bob
Judd, Frank
Ross, Rt Hon W. (Kilmarnock)


Cunningham, G. (Islington S)
Kaufman, Gerald
Rowlands, Ted


Cunningham, Dr J. (Whiteh)
Kelley, Richard
Sandelson, Neville


Davidson, Arthur
Kerr, Russell
Sedgemore, Brian


Davies, Bryan (Enfield N)
Kilroy-Silk, Robert
Selby, Harry


Davies, Denzil (Llanelli)
Kinnock, Neil
Shaw, Arnold (Ilford South)


Davies, Ifor (Gower)
Lambie, David
Sheldon, Robert (Ashton-u-Lyne)


Davis, Clinton (Hackney C)
Lamborn, Harry
Shore, Rt Hon Peter


Deakins, Eric
Lamond, James
Short, Rt Hon E. (Newcastle C)


Dean, Joseph (Leeds West)
Latham, Arthur (Paddington)
Short, Mrs Renée (Wolv NE)


Delargy, Hugh
Leadbitter, Ted
Silkin, Rt Hon John (Deptford)


Dell, Rt Hon Edmund
Lee, John
Silkin, Rt Hon S. C. (Dulwich)


Dempsey, James
Lestor, Miss Joan (Eton &amp; Slough)
Sillars, James


Doig, Peter
Lever, Rt Hon Harold
Silverman, Julius


Duffy, A. E. P.
Lewis, Arthur (Newham N)
Skinner, Dennis


Dunn, James A.
Lewis, Ron (Carlisle)
Small, William


Dunnett, Jack
Lipton, Marcus
Smith, John (N Lanarkshire)


Eadie, Alex
Litterick, Tom
Snape, Peter


Edge, Geoff
Loyden, Eddie
Spearing, Nigel


Edwards, Robert (Wolv SE)
Luard, Evan
Spriggs, Leslie


English, Michael
Lyon, Alexander (York)
Stallard, A. W.


Ennals, David
Lyons, Edward (Bradford W)
Stewart, Donald (Western Isles)


Evans, Fred (Caerphilly)
McCartney, Hugh
Stoddart, David


Evans, Gwynfor (Carmarthen)
McElhone, Frank
Stott, Roger


Evans, Ioan (Aberdare)
McGuire, Michael (Ince)
Strang, Gavin


Ewing, Harry (Stirling)
Mackenzie, Gregor
Summerskill, Hon Dr Shirley


Faulds, Andrew
Maclennan, Robert
Swain, Thomas


Fernyhough, Rt Hon E.
McMillan, Tom (Glasgow C)
Taylor, Mrs Ann (Bolton W)


Fitch, Alan (Wigan)
McNamara, Kevin
Thomas, Dafydd (Merioneth)


Flannery, Martin
Madden, Max
Thomas, Jeffrey (Abertillery)


Fletcher, Ted (Darlington)
Mahon, Simon
Thomas, Mike (Newcastle E)


Foot, Rt Hon Michael
Mallalieu, J. P. W.
Thomas, Ron (Bristol NW)


Ford, Ben
Marks, Kenneth
Thompson, George


Forrester, John
Marshall, Dr Edmund (Goole)
Thorne, Stan (Preston South)


Fowler, Gerald (The Wrekin)
Marshall, Jim (Leicester S)
Tierney, Sydney


Fraser, John (Lambeth, N'w'd)
Mason, Rt Hon Roy
Tinn, James


Freeson, Reginald
Maynard, Miss Joan
Tomlinson, John


Garrett, John (Norwich S)
Meacher, Michael
Tomney, Frank


Garrett, W. E. (Wallsend)
Mellish, Rt Hon Robert
Torney, Tom


George, Bruce
Mendelson, John
Tuck, Raphael


Gilbert, Dr John
Millan, Bruce
Urwin, T. W.


Ginsburg, David
Miller, Mrs Millie (Ilford N)
Varley, Rt Hon Eric G.


Golding, John
Molloy, William
Wainwright, Edwin (Dearne V)


Gould, Bryan
Moonman, Eric
Walden, Brian (B'ham, L'dyw'd)


Gourlay, Harry
Morris, Alfred (Wythenshawe)
Walker, Harold (Doncaster)


Graham, Ted
Morris, Charles R. (Openshaw)
Walker, Terry (Kingswood)


Grant, George (Morpeth)
Morris, Rt Hon J. (Aberavon)
Ward, Michael


Grant, John (Islington C)
Moyle, Roland
Watkins, David


Grocott, Bruce
Mulley, Rt Hon Frederick
Watkinson, John


Hamilton, James (Bothwell)
Murray, Rt Hon Ronald King
Watt, Hamish


Hardy, Peter
Newens, Stanley
Weetch, Ken


Harrison, Walter (Wakefield)
Noble, Mike
Welsh, Andrew


Hart, Rt Hon Judith
Oakes, Gordon
White, Frank R. (Bury)


Hattersley, Rt Hon Roy
O'Halloran, Michael
White, James (Pollok)


Hatton, Frank
O'Malley, Rt Hon Brian
Whitehead, Phillip


Hayman, Mrs Helene
Orbach, Maurice
Whitlock, William


Healey, Rt Hon Denis
Orme, Rt Hon Stanley
Wigley, Dafydd


Heffer, Eric S.
Ovenden, John
Willey, Rt Hon Frederick


Henderson, Douglas
Owen, Dr David
Williams, Alan (Swansea W)


Hooley, Frank
Padley, Walter
Williams, Rt Hon Shirley (Hertford)


Howell, Denis (B'ham, Sm H)
Palmer, Arthur
Williams, W. T. (Warrington)


Hoyle, Doug (Nelson)
Park, George
Wilson, Alexander (Hamilton)


Huckfield, Les
Parker, John
Wilson, Gordon (Dundee E)


Hughes, Rt Hon C. (Anglesey)
Parry, Robert
Wilson, Rt Hon H. (Huyton)


Hughes, Robert (Aberdeen N)
Pavitt, Laurie
Wilson, William (Coventry SE)


Hughes, Roy (Newport)
Pendry, Tom
Wise, Mrs Audrey


Hunter, Adam
Perry, Ernest
Woodall, Alec


Irvine, Rt Hon Sir A. (Edge Hill)
Phipps, Dr Colin
Woof, Robert


Irving, Rt Hon S. (Dartford)
Prentice, Rt Hon Reg
Wrigglesworth, Ian


Jackson, Colin (Brighousa)
Price, William (Rugby)
Young, David (Bolton E)


Jackson, Miss Margaret (Lincoln)
Rees, Rt Hon Merlyn (Leeds S)



Janner, Greville
Raid, George
TELLERS FOR THE NOES:


Jay, Rt Hon Douglas
Richardson, Miss Jo
Mr. John Ellis and


Jeger, Mrs Lena
Roberts, Albert (Normanton)
Mr. Joseph Harper.


Jenkins, Hugh (Putney)

Question accordingly negatived.

Orders of the Day — BUSINESS OF THE HOUSE

Ordered
That the Motion relating to Privileges may be proceeded with at this day's sitting, though opposed, until any hour.—[Mr. Walter Harrison.]

Orders of the Day — COMMITTEE OF PRIVILEGES (REPORT)

Ordered,
That the First Report from the Committee of Privileges House of Commons Paper No. 22) be now considered.—[Mr. Strauss.]

Report considered accordingly.

Mr. Speaker: Order. Will hon. Members withdraw as quickly as possible and converse outside?

10.15. p.m.

Mr. George Strauss: I beg to move,
That this House agrees with the Committee in paragraph 9 of the said Report.
I move the motion on behalf of the Committee of Privileges, whose conclusions were unanimous. I commend the motion to the House and hope that the House will accept it.
The issue before the House is not whether the Committee of Privileges is correct in saying that the actions of the two journalists concerned, Mr. Knight and Mr. Schreiber, were in contempt of the House. That is generally agreed. Indeed, the two gentlemen do not question it. They say that they did not realise it to the full extent at the time, although they suspected it. That is not in question. The question which the House must decide tonight is whether the disclosure of Select Committee documents should be considered as a serious matter or dismissed as a minor one, and whether the penalty proposed by the Committee of Privileges is appropriate in this case.
It is not a conclusive answer to that question to say that Parliament has always maintained the right to exclude journalists from Committees and to maintain the privacy of Select Committees. The right of privacy and making its infringement a contempt of the House is stated in a rule passed by the House in 1837. Since then until the present day the accumulated

wisdom of Parliament has regarded the disclosure of matters coming before Select Committees—whether they are speeches by Members or documents—as damaging to Parliament and has considere that those responsible for disclosure should suffer some penalties.
The reasons why it is damaging for documents before a Select Committee or discussions in a Select Committee to be disclosed or published are simple. They are that Select Committees cannot function properly unless they work and act in private, and any interference with that privacy makes it impossible for them to carry out the duties imposed upon them by Parliament. Those duties are to investigate political, economic and social matters and report their conclusions to the House, and recommend the adoption of a policy.
After its investigation, perhaps including the examination of many witnesses, a Committee considers in strict privacy before reaching its final decision the arguments which its members have advanced. The whole atmosphere of privacy in which that deliberation takes place is essential, if a verdict is to be reached which has any chance of general agreement and of commending itself to the House. I think that that principle is generally accepted. When a Committee deliberates in private, Members exchange views freely. They make statements and advance ideas which they may not maintain later. They often act as the Devil's Advocate and put forward for discussion documents to which they are not bound.
If all that were to take place in public and be fully reported, members of the Committee as a whole would be subject to constant pressure from outside. The whole atmosphere would change, and the chances of a Committee sinking political or other differences and coming to a unimous conclusion would disappear.
For that reason, Parliament has always held that a Committee should be able to deliberate in complete secrecy, when all the discussions and the documents placed before it, including draft reports from Committee members or the chairman, should be treated with complete secrecy until the Committee has reported. That principle has been accepted.
In this case the principle has been violated. That is admitted. The two people in question are respected journalists. One is the editor of The Economist and the other has worked on The Economist for some time. He has worked in the House with a number of hon. Members. The two journalists together agreed to the publication of a document which was the draft report of the chairman of a Select Committee and which should not have been published.
It has been suggested that no particular harm has been done in this case. That may or may not be so. It is always impossible to measure what harm has been done. The damage is that disclosure has been made. If it has been made on this occasion and no action is taken by Parliament to penalise those responsible, it is likely to be made on other occasions, perhaps frequently, and then the whole principle of privacy in Select Committees' discussions will disappear.

Mr. George Cunningham: My right hon. Friend seems to be suggesting that it is the normal practice for Select Committees' proceedings to be in private. My understanding is that probably a majority of the sittings of Select Committees these days are in public, with the approval of the Select Committee concerned. Is that not a fact? Is not the point here not that the proceedings of Select Committees should be open to the public but that when a Committee decided that its affairs should be kept private that decision was breached?

Mr. Strauss: My hon. Friend is right. A great part of the work of a Select Committee is carried out in public, particularly the examination of witnesses. But when the Committee reaches the stage of trying to decide what line to take, where the truth lies and what policy to advocate to the House, it almost invariably demands that it should operate in private and that all its activities, all the speeches made by its members should be regarded as private until it reports. When that principle is no longer observed, the work of the Select Committee will become very difficult. They will be unable to fulfil the functions that they have carried out over decades and

centuries in helping this House to conduct its business.
It may be said that no harm has been done by this disclosure. However, the point is that a disclosure has been made deliberately. Unless this House takes note of it, says that this is wrong and inflicts some penalty on those responsible, disclosures will occur in the future readily and frequently.
We are all aware that journalists are anxious whenever they can to get hold of secret information, especially when it is contained in documents coming before Committees of this House. Their desire is to publish it. If they are aware that they can do so without any fear of Parliament taking penal action against them, they will do so on many an occasion.
It would have been quite possible for the Committee of Privileges to have said, "These gentlemen have committed a contempt of the House. They admitted that towards the end of our inquiries. But they have apologised for it and, therefore, we recommend that no further action be taken." If we had said that, we would not have been upholding a rule that this House has always considered to be of great importance, and the action would have become a precedent by disclosure.

Mr. Daniel Awdry: The right hon. Gentleman has referred a number of times to the journalists who committed this offence. Is not the real villain of the piece the person who disclosed the information to the journalists?

Mr. Strauss: Of course he is the real villain of the piece. But we do not know who he is. We cannot get hold of him. As the House knows, the Committee of Privileges asked every hon. Member serving on the Select Committee whether he could help our Committee by telling us where the leak may have taken place. No one was able to do so. But because we cannot find the chief culprit, that does not mean that we should refrain from taking action against those who published the information which they got from that culprit knowing that it was wrong to do so.
The Committee of Privileges has to deal with matters of this kind often. It is always anxious, wherever it can, to avoid advising penal action


against those responsible. Where an apology is made, the Committee accepts it. It falls over backwards in its willingness to accept any reasonable excuse. The culprit may say that he was ignorant of the laws of privilege. He may say that he was not aware of the confidentiality of the information. He may say that he was assured by some Member of Parliament that there was no contempt involved in his disclosure. In such cases, the Committee has always said, "You did wrong, but we shall take the matter no further."
Here, the situation is different. Two gentlemen knew perfectly well that they were publishing a document which Parliament said they should not publish. They admitted it. Anyone reading the evidence will see that. They said that they were not certain that they were committing a contempt of the House but that they thought they might be. However, they took no steps to check that they were.
In any event, one matter is clear. It is that they knew that they were publishing a document which Parliament said they should not publish. Therefore, their action was a deliberate breach of the rules of the House. They knew that they were flying in the face of the rules of Parliament. For that reason, we thought it right to recommend that some penalty should be imposed.
Are the penalties so harsh as to be unreasonable? [HON. MEMBERS: "Yes."] It must be realised that the publication of this document arose because one gentleman concerned, Mr. Schreiber, works informally and unofficially in the House. In that way he came into contact with a number of hon. Members and was—we do not know how, when or where—given the document on which he based his article in the Economist which was the contempt of the House.

Mr. Michael Latham: Is it not clear from the repeated answers that Mr. Schreiber gave that he denied absolutely and completely any suggestion that he received the document in any other capacity than as a journalist?

Mr. Strauss: I am not questioning that. Of course he is a journalist, and as such he was in contact with Members

of this House—which one we do not know. As a journalist working constantly in the House he got this document.

Mr. Nigel Lawson: rose—

Mr. Brian Sedgemore: What do you know about it?

Mr. Lawson: I know nothing about it and have written to the right hon. Member for Vauxhall (Mr. Strauss) to say that I know nothing about it. That is the position.
Is it not wrong of the right hon. Gentleman to base a statement on an unwarranted assumption? All that is known is that the document began in the hands of someone who legitimately should have had it, and that it ended, after a chain, the length of which we do not know, in the hands of Mr. Schreiber. That is all we know. We know nothing about how many links there were in the chain or who those links were.

Mr. Strauss: I do not think that the hon. Gentleman is quite accurate. We know that copies of the document went only to members of the Committee. Having received one document each, they were responsible for what happened afterwards. Each member of the Committee wrote to the Committee of Privileges to say definitely that his document, either through his secretary or anyone else, could not have reached Mr. Schreiber. One of them, frankly, was plainly lying.

Mr. Ian Gow: Would the right hon. Gentleman clarify one point? I was a member of the Select Committee, and I do not remember any question being addressed to me in the terms in which the right hon. Gentleman says that it was put. Second, would he correct his earlier statement, that Mr. Schreiber received the document in the precincts of this place? Having read the Report, I can see no evidence to support that proposition.

Mr. Strauss: The hon. Gentleman is quite right on the last point. I was suggesting that it seems obvious that he received the document from some members of the Committee, directly or indirectly as a result of his association with Members working in this place. He was a frequent visitor to Parliament and that, in all probability, is how he got the document. We


do not know. We can think of no other way in which it could be done.
The hon. Gentleman says that members of the Select Committee were not addressed in the terms I stated. They were not exactly the words, but they were so similar as to make no difference. So far as I remember, we asked every member of the Committee whether he could help the Committee of Privileges to ascertain the means by which this document had got into the hands of some journalist. That surely is the same thing.

Mr. Kenneth Lewis: We are in some difficulty. If it is accepted, as the right hon. Gentleman seems to be accepting, that one of a group of Members of Parliament allowed this document to get to a journalist when he knew that it should not, how can the House act against the journalist? The House is acting for the Committee as well as for itself. Therefore, the Committee is acting against a journalist when Members are to blame.

Mr. Strauss: The hon. Gentleman can make that point, but it does not appear to me to be valid. I can only repeat that journalists who knowingly publish documents which they know or think constitute a contempt of the House and the publication of which is contrary to the desires of the House are guilty of an offence irrespective of where they get the documents.

Mr. Cledwyn Hughes: Will my right hon. Friend confirm that it was clear from the evidence given to the Committee that the permit granted to Mr. Schreiber to enter the House was in the capacity not of a journalist but as a secretary?

Mr. Strauss: I am not sure whether some hon. Members who have intervened are indicating that there should be no penalty whatever for these people and that they should be told, "It is all right. Someone gave you the document. If you publish it, although it is contrary to the desire of the House and in grave contempt of the House, nothing will be done." I am not sure whether that is their argument. Perhaps they are arguing that the penalty which the Committee of Privileges recommends is too severe.
The penalty proposed is that these people should not attend the House for

six months except to see their Member of Parliament on constituency matters. The House must realise that if Mr. Schreiber had been a member of the Lobby he would never have been able to do what he did and to publish this document in contempt of the House, or, if he had done so, he would no longer have been a member of the Lobby. He was able to do that because he was a freelance journalist working in the House a great deal of the time and in association with a number of Members. If we say that for six months he should not have access to the House, that seems to be a punishment—not a very severe one—that fits the crime. It is not especially onerous or heavy, but it is sufficiently onerous to indicate to journalists in general, and the whole world, that this House takes a serious view of the offence of contempt of the House. When a journalist or editor gets hold of a document which he knows to be secret and to be before a Select Committee or any other Committee and then publishes it it is a serious offence and this House will take notice and action. Therefore, the imnotice and action. For that reason, the imposition of this penalty is important, not because it is likely to have any serious effect on the two gentlemen in question.
Both these gentlemen knew that they were doing wrong. I do not think they could expect to get away with it without receiving any penalty. I suggest that if Parliament on this occasion said that it was all right, that they could be cleared, given a rebuke, and told to go away and not to do it again, Parliament would never again be able to take effective action against those who published secret documents, the publication of which was a contempt of the House. If the House turned down the unanimous Report of the Privileges Committee it would be grave and seriously damaging by the House.

10.38 p.m.

Mr. Paul Channon: I beg to move, to leave out from "House" to the end of the Question, and to add instead thereof,
while regretting the leakage of information from the Select Committee on a Wealth Tax and its publication by The Economist, considers that no further action need be taken in the matter".


First of all I should like to say how much I appreciate the work of the right hon. Member for Vauxhall (Mr. Strauss) and the Committee of Privileges. I am sure I speak for many other hon. Members when I express our gratitude for the hard work which they have done for many years for the House. They have the respect of all hon. Members for the work they are doing and for the difficult decisions which they have to take.
If I seek to criticise the decision taken by the Committee of Privileges I hope that it will be in no way taken as a reflection upon the work of that Committee or the high standards which I am sure it has applied to this case. I shall, however, draw swords for a moment with some of the remarks of the right hon. Member for Vauxhall. He made the curious remark that if Mr. Schreiber had been a Lobby correspondent he would not have been allowed to remain a member of the Lobby. If he casts his mind back he will remember that on the last occasion this situation arose in connection with a distinguished member of the Lobby who remains a member of the Lobby to this very day.

Mr. Strauss: That gentleman's defence was that he had no reason to believe, and did not believe, that the document in question was a Select Committee document. He thought that it was issued by the Government for Government purposes. It was partly on those grounds that the Committee decided, by the casting vote of the chairman, not to take any punitive action.

Mr. Channon: I thought it was important to get the record straight and to say that what the right hon. Gentleman has told the House was not strictly accurate in that respect. The House must realise that we are debating an extremely rare event. I have been a Member of this House for nearly 17 years and during that time there has been only one debate on such an issue. The Committee must have felt that this was a case of such unique character that it had to bring it to the attention of the House and to propose a penalty of this kind.
The House must decide, in reaching a conclusion whether to adopt the Committee's

Report, whether the Committee was justified in taking such a serious view. I remind the House of what the Select Committee on Parliamentary Privileges said in its Report in 1967. It said:
The House should exercise its penal jurisdiction

(a)in any event as sparingly as possible, and
(b)only when it is satisfied that to do so is essential in order to provide reasonable protection for the House, its Members or its Officers from such improper obstruction or attempt at or threat of obstruction as is causing, or is likely to cause, substantial interference with the performance of their respective functions."

It is in the light of that that the House should decide whether what the Select Committee proposes is reasonable.
I disagree with the right hon. Gentleman when he said that we should not look at the results of any case but merely examine the extent of the offence before deciding what is the appropriate penalty. That has never been the policy of the Committee of Privileges or of the House. In the past the Select Committee—and I have innumerable cases here—and the House in following or rejecting the Committee's advice, has always decided what has been the effect of the conduct of those concerned before deciding what penalty was appropriate. This is extremely relevant—[Interruption.] I am about to refer, with approval, to my right hon. Friend the Member for Stafford and Stone (Mr. Fraser). Perhaps he will listen to me with approval. It is important that we should look at what is the result of the offence.
What is the accusation against Mr. Schreiber and Mr. Wright? The first question is: were they guilty of contempt of this House? In my mind that is an extremely easy question to answer. They certainly were. The article in The Economist clearly reveals what was the Chairman's first draft report of the Select Committee on a Wealth Tax and, as the rules stand, they are in contempt of the House. That must be common ground.
The next question is: what, if any, penalty should be imposed? The first thing to ask is whether this did any damage. Having read the Report on the wealth tax and the four well-written and highly documented alternative drafts put before the House, I must ask whether it is seriously suggested that a short article in The Economist actually had the effect of changing the Report of the Select


Committee. If it did, the Select Committee has a powerful point but I must say that I beg leave to doubt that this was the case. I do not believe that there was a substantial change in the Report as a result of this leak—or, indeed, any change.
The next question is this: is the offence likely to recur? The right hon. Gentleman has said that if we do nothing about this case people will do this type of thing again and again and it is therefore essential that we should mark our disapproval. I do not believe that. The last occasion on which a case similar to this arose—a Report of a Select Committee was published in a daily newspaper before the date of publication—the journalist concerned apologised to the House and no further action was taken. So far as I know no further cases have arisen. I do not believe that if we decide to take no further action in this matter either The Economist or any other newspaper is likely to act in the same way.
Before I go further I ought to declare that I have known Mr. Schreiber for a number of years but I have not seen him for at least 18 months. I have had no substantial discussion with him and no discussion with Mr. Knight about the merits of this case.
The next argument advanced by some hon. Members is that it is essential for the House to show that on occasions it can mean business, and that people who flout its rules do so at their peril. To some extent I agree with them. When there is a serious contempt, the House should rightly punish those concerned. But the House of Commons must not be a paper tiger. It should not bare its teeth and use its undoubted powers unless that is absolutely essential. I contend that in this case, in the Daily Mail case of 1971 and in the Scargill case, which also involved a very serious contempt, it was not thought right by the Select Committee of Privileges to take any further action.
I believe that in all these cases the House of Commons was right. We must decide this matter in the context of what happens about confidential documents in 1975. Is it not somewhat farcical that we should tonight be asked to express our disapproval on this matter when extensive stories were leaked over the weekend about Chrysler, dealing with whether Ministers were to resign, whether the

Cabinet was split and so on? We all know perfectly well that Governments of every political complexion, and individual Ministers from time to time, leak stories to the Press when it suits them. They do so on far more serious matters than the first draft report of the Chairman of the Select Committee on the Wealth Tax. Is it not hypocritical of the House to condone one and to condemn another.

Mr. Peter Tapsell: Is my hon. Friend not in some danger of saying that because the standards of public life may have declined in the recent past, therefore the House should condone that fact?

Mr. Channon: That is not what meant. I hope that the result of this debate will be that there will be no further disclosures of this kind either by The Economist or by any other newspaper.

Mr. Cledwyn Hughes: Surely the hon. Gentleman should distinguish between matters which can be properly referred to the Committee of Privileges and matters which are not the responsibility of this House.

Mr. Channon: I shall come to that matter.
There is one other aspect on which I draw on my experience as a junior Minister in the last Conservative Administration. The hon. Member for Salford. East (Mr. Allaun) thought it right, at the time we were discussing matters with the local authority associations, to publish a confidential document. I make no criticism of that at this stage. No one in the House suggested that he should be committed for contempt or prosecuted under the Official Secrets Acts.
The House should temper justice with mercy. I concede that this was a contempt of the House. I do not think that any substantial damage was done, although embarrassment was undoubtedly caused. The leaking of a draft is an embarrassment.

Mr. Jeremy Thorpe: The hon. Member is putting forward the argument that we can be certain that this will not happen again and that therefore no further action should be taken. Select Committees operate on the basis that during their discussions their proceedings


are totally confidential, as used to be the position in Cabinet before the Cross-man Diaries. Does he not think that that process would be inhibited if individual members of Select Committees were aware that their confidential discussions were at risk in that, were information or documents to come, in the course of discussion, into the hands of the Press they could be published with impunity?

Mr. Channon: The hon. Gentleman has put his finger on an important problem, but that is not a criticism in this case, as it was in the 1971 case. Although journalists have to bear their share of responsibility, surely far more should fall on whoever leaked the document. No one knows whether a Member is involved in this case. But if a Member were involved in either of those two cases, surely it would be the action of that Member, far more than that of a newspaper, which was inhibiting his colleagues.
I quote what my right hon. Friend the Member for Stafford and Stone said in Question 151. Towards the top of page 14 he said—and I agree with him:
Surely, if journalists are given access to this House they must co-operate with the rules of the House
He then expanded on those remarks and said:
if people come into this House as political journalists working within the framework of Parliament it must be wrong to have abuses of confidence on which the committee system must work.
My right hon. Friend was entirely right about that. We must not get the impression that these journalists do not recognise that they were wrong and have not apologised. They apologised and admitted that they were wrong. Under the circumstances I for one, and I hope that some other hon. Members will agree, believe that it would be wiser for the House to leave the matter there rather than to suspend a person for six months.
I understand—perhaps the right hon. Gentleman the Leader of the Opposition will tell us—that the precedent for suspending someone for six months and preventing him from coming into the precincts of the House was last used in 1901 when Mr. Speaker of the day declined to give the orders which he had been asked to give. The precedents are

extremely rusty. It does not suit the best interests of the House and is beneath the dignity of the House to pursue the matter further. I understand that the journalists and the newspaper concerned will not offend in this way again. In the light of the debate, the Committee's Report, the debate we shall have tonight and the general discussion that has taken place, I do not believe that other newspapers will do so.
The House would be wiser, having made its views strongly known, having expressed them in this debate and having agreed that what has taken place has been a contempt of this House, to leave the matter where it is and not suspend these people for six months. I hope that on reflection the House will accept that.

10.52 p.m.

Mr. John Pardoe: I respect entirely the reason that the Select Committee of Privileges has put forward in its Report and the reason adduced this evening by the right hon. Member for Vauxhall (Mr. Strauss). He has been a Member of this House a great deal longer than I have. He probably respects the traditional privileges of this House more than those hon. Members who have been elected to Parliament in the past 10 years, as I have.
I was a member of the Select Committee and, therefore, I suppose that I am suspect. I suppose also that I have to take account of paragraph 6 of the Committee's Report which is entitled
The conduct of the person who made the Draft Report available to a journalist
in which it is said:
In these circumstances there is no further action that Your Committee can take on this aspect of the matter, except to report their opinion that should it subsequently transpire that the informant was someone who had had an opportunity to assist Your Committee, the House should treat that person's conduct as deserving of the utmost severity.
I, like other hon. Members of the Committee, told the Chairman of the Committee in answer to his letter that to my knowledge—and one cannot say more than that—there was no way in which the Report, which was in our individual possession, came into the hands of Mr. Schreiber. I know Mr. Schreiber briefly from a meeting which I had with him at the last Liberal assembly before


the publication of this Report. I have not met him since. I understand that he advises the Conservative Party, although I do not hold that against him. I know, for instance, that the political editor of The Economist is an ex-Labour Member of this House but I do not suppose that it came into Mr. Schreiber's hand from him either, although he may well have had contact with many Labour Members. Therefore, the idea that accusations should be tossed back and forth across the Chamber on the basis that somehow Conservative Members must be guilty because Mr. Schreiber seems to advise the Conservative Party is wrong, and I wish that hon. Members would shut up about that point.
I have no doubt that a breach of privilege occurred, as defined by the existing rules. The hon. Member for Southend, West (Mr. Channon) has said that. The staff of The Economist, the editor and Mr. Schreiber, have also said it. I accept that. Therefore, the Committee had to find that this breach of privilege had occurred. What we have to consider is not whether what occurred was a breach of privilege but whether such action ought to be a breach of privilege at all and whether that action by The Economist merits any punishment, let alone the punishment which has been recommended by the Committee.
We have to consider something else, too. The rules governing contempt of the House and breach of privilege exist, I suppose, for two main reasons: first, to defend this House from becoming an object of ridicule and contempt outside; secondly, to ensure that the House can do its work effectively. The second reason is by far the more important. Indeed, I am not at all sure whether the first ought to be a reason today. I take the view that if we pursue the line that the Committee has recommended to us we are far more likely to bring ourselves into ridicule and contempt than may anything that has been done by anyone who is not a Member of this House.
However, if that is a reason and if the question of contempt and ridicule outside is a reason for these rules of privilege, we must consider the effect of our actions tonight on the reputation of this House. If, as I shall contend, the action by The Economist that we are discussing in no way diminished the ability of this

House, or its Select Committee, to do its work, we shall undoubtedly make fools of ourselves if we pursue the course of action recommended by the Committee. There is no greater ridicule than self-ridicule, especially when it is unintended. Therefore, let us consider the effect that the action of The Economist had on the work of the House and particularly on the work of the Select Committee of which I was a member.
The Select Committee was set up to consider possible legislation before it was introduced. In that sense it was a fairly rare occurrence. It is a comparatively new device. It is a very important device. I hope that it will be used much more in the future than it has been used in the past. The formal Standing Committee procedure on a new tax which has already been drafted in legislative form is wholly unsatisfactory. Those of us who had to sit as members of the Standing Committee which considered the capital transfer tax experienced that feeling only too well. It would have been far better if we had had the Select Committee pre-legislative procedure before we came to consider the draft legislation.
I admit that the Select Committee pre-legislative procedure is also not wholly satisfactory. Obviously the party system which inevitably operates, whereby each party group tends sometimes to become, in the words of the Prime Minister, a tightly-knit group of politically motivated men, is inimical to free and objective discussion. Inevitably in this House it will seep into the work of a Select Committee.
There are many things that could improve the pre-legislative Select Committee procedure, but one thing that cannot improve such procedure is greater secrecy. I take issue with the right hon. Member for Vauxhall on that subject. There is absolutely no value to be attached to secrecy in the deliberations of a Select Committee. The party dimension would flourish more behind closed doors than in the open. The more the Press and the broadcasting media were there to cover the deliberations of the Select Committee the less would party play its part.
The difficulty of a member of a committee charged with investigating highly technical subjects was raised by me in a letter to the Chairman of the Committee of Privileges. I imagine that that letter is the property of he Select Committee,


and I suspect that I would probably be debarred from appearing in the Chamber for six months or more, or taken to the Tower, if I were to read it—[HON. MEMBERS: "Read it".] I did not mark the letter confidential, but I have a nasty feeling that it has become confidential by a mysterious kind of transmutation. It was received by the Select Committee although it was not published in its Report.
I had a helpful, detailed and confidential reply from the chairman. I think it is a great pity that letters were written—I make no point about my own letter but I happen to know that another member of the Select Committee, the right hon. Member for Farnham (Mr. Macmillan), wrote a somewhat similar letter to the Chairman of the Committee of Privileges—which were not published in the Report. I think that it might have helped Members who were not members of the Select Committee on the tax credit scheme if they had been published.
I shall summarise the difficulties of a member of the Committee charged with examining an extremely complicated piece of future legislation. It is virtually impossible for Members who become members of such a Committee to know every conceivable detail of the matter with which they are charged. They cannot be specialists and experts on every facet of the wealth tax, for example. That would be impossible. Therefore, they use advisers as much as they can. I freely admit that I accepted and used outside advice.
There comes the problem whether the advice that is used comes from a research assistant or from an unofficial arrangement. Not many Members can afford to pay for a research assistant but perhaps it would be better if we could, thus putting the matter on a formal basis in the same way as the American system provides.
Draft reports also raise problems. When considering whether we should draft an alternative report or make amendments to the draft report, how can we use the advice that we have been using quite openly throughout the earlier stages of the Committee? I am not at liberty to read the reply that I received from the right hon. Member for Vauxhall but

I do not think he will mind if I summarise pretty inadequately the view that he expressed. He wrote that there was no reason for a member of the Committee not to use advice and no reason for an adviser not to be shown a document provided that it was made clear to the individual that it was a secret document. But if one shows a document to a third person, how can it be ensured that he does not show it to another person? It is impossible to proceed on such an unofficial basis in spite of what has been implied.
What happens if the adviser is a journalist? Most advisers write articles from time to time. They would hardly be worthwhile advisers if they did not. It is difficult for an adviser to be certain that in the course of an article which he writes he does not use information which he has gained as a result of his position as an adviser to a member or members of a Select Committee.

Mr. Evan Luard: If a member of the Wealth Tax Committee showed such a document, or the document concerned in this debate, to an adviser in the way that the hon. Gentleman has described, surely it would not be possible to write to the chairman to the effect that it was impossible to say how the document had come into the hands of the journalist. In those circumstances it would be necessary to say that the document had been allowed to get out of one's hands and that it was not possible to say exactly what had happened to the document at a later stage.

Mr. Pardoe: I am not saying that I allowed the document to go out of my hands. I am posing the difficulties of the work involved, and I put those problems in extenso to the Chairman a the Select Committee in a long letter which I am not at liberty to quote. I did not merely say that I had not handed the document to Mr. Shreiber. I said that I had also undertaken investigations to ensure that the document did not leak from my office or staff. That is all any hon. Member can say; he cannot go further than that. I took precautions to ensure the truth of the statement, but I can go no further than that.
If the adviser happens to be a journalist or write articles, he has to undergo a self-denying ordinance. He has to say


that he will not write articles for anybody at all in that period—[HON. Members: "No."] He should at least ensure that he does not leak something that comes into his possession from a document he should not have seen. That is all I am saying.
I am in some difficulty since I have seen the letter from the Chairman of the Committee of Privileges. That makes it an unofficial understanding and such an understanding will not be satisfactory. It should be possible to have advice. Apparently it is also possible to show an adviser documents. But in my view that unofficial understanding cannot be made to work. It appeals that there is a difference between the early stages of the Select Committee and the later deliberative stages. I do not accept that distinction. Surely secrecy will not lead to agreement. If the Select Committee on a Wealth Tax is anything to go by, it was not the fact that Mr. Shreiber divulged parts of a document that was secret that caused us to produce five different Reports. There were many more complex reasons for that kind of disagreement. I do not believe that secrecy will bring agreement.
The other argument is that the chairman's report, being the Chairman's draft report, must not be discussed in the Press because it would be embarrassing to him if it were shown how far it had been amended by the Committee in deliberation. But it is possible to see how far we have amended the Report. We have published two draft reports. There is a substantial difference between the first draft report and the last draft report. Any who makes a comparison can draw conclusions. Is that embarrassing to the chairman?, I suggest that it is not. Even, if it is embarrassing, let us overcome the matter in a different way. Let us get rid of the unreal fiction that this is the Chairman's Report. It is a report drafted by the staff of the Committee, and there is no embarrassment about amending it at a future stage.
The right hon. Member for Southend, West asked members of the Committee whether the report in the Economist changed their Report in any way. I do not think it did. But even if it had done so, would it have mattered? Surely it would have been a good thing if at that stage members of the Second Select Committee had been subjected in some way

to influence or arguments from outside that might possibly have changed their view about the nature of the draft report. I see nothing wrong in that and I believe that it would have been perfectly proper.
I shall support the amendment. Perhaps I should draw the attention of the House to a letter published in The Economist on 13th December from the political editor of the Sunday Mirror. He quite clearly issues a threat to hon. Members and virtually states that he will recommend his colleagues to withdraw from the Lobby and the Press Gallery if the House takes the ludicrous step of backing the Select Committee's decision. [HON. MEMBERS: "Where are they now?] I very much hope that if the House decides to do anything so ludicrous as to support the Committee's extraordinary recommendation the Lobby will withdraw. [HON. MEMBERS: "They already have."] This would hurt hon. Members more than the journalists. Hon. Members are often here only because the Lobby is here and for very little other reason.

Sir David Renton: I wonder whether the hon. Member is aware that Lobby correspondents attending this House submit themselves to a very strict discipline in relation to Select Committees and the documents of the House? Mr. Schreiber and the editor of The Economist are not members of the Lobby and do not accept that discipline and are therefore prepared to be treated differently from other journalists.

Mr. Pardoe: I am not saying they should have done what they did or that it was not a breach of privilege, but it was useful and if it leads to a change in the rules of privilege to allow Committees to do their job effectively it will have been even more useful. If the recommendation is carried tonight, Select Committees will not be able to do their job more effectively, and we shall be diminishing their job and making the House a fool.

11.12 p.m.

Mr. J. W. Rooker: It will be a long time before I ever raise a question of privilege at 3.30 p.m. It will not go unnoticed that it has taken hon. Friends and me six months to get a debate on unemployment, while it has taken only two weeks


to get a debate on the breach of the rules of the club. I agree with the last sentences of the hon. Member for Cornwall, North (Mr. Pardoe). I hope the rules are changed.
I ought to make clear that I had not heard of Mr. Schreiber until two weeks before the Report was published—six weeks after I had first raised the matter. I did not even know the name of the editor of The Economist, except that it was not Alastair Burnet and I wish it had been Alastair Burnet. I also did not know that the office of the Leader of the Opposition was indirectly involved, and I am prepared to apologise in public for the extreme embarrassment caused to her. It was unintentional. I did not know about Mr. Schreiber at the time. The right hon. Lady was a member of the Committee of Privileges, but she did not attend one of the meetings while this subject was under discussion.
I would not expect any journalist worthy of the name to divulge his sources of information and one cannot argue that the crime was not to give the Committee the name of who did it. This is the dilemma I face. I have read the Report a few times and I do not agree with the recommendation of paragraph 9. We are debating a recommendation that we should penalise these journalists. Everyone, including the journalists, agrees that the issue, which I first raised as a matter of contempt, is a breach of the rules of privilege of the House.
The point at issue is that a journalist does not divulge his sources. As my right hon. Friend the Member for Anglesey (Mr. Hughes) said, Mr. Schreiber is not a journalist. I understand that he is not a member of the National Union of Journalists, but that is not the only qualification a journalist has.
Mr. Schreiber admitted that the word "Secretary" appears on the pass he uses around this place. If my secretary, or the secretary of any other hon. Member, appeared at the Press table during a Select Committee public hearing, something would be said about it.
Mr. Schreiber said that the two journalists were originally there to report the public evidence. Mr. Schreiber's position was slightly different. He was part of the "club" because he was working

for the former Leader of the Opposition, and that is how he got his pass in the first place. We are not talking about a journalist in the real sense of the word. He said many times that he obtained the information only because he was a journalist. The fact that he would not answer many questions means that we cannot take at face value the answers he did give.
The letter subsequently written by Mr. Schreiber to the Clerk of the Committee given in Appendix 3 compounds the offence, in that he was not really on the level. I do not take everything he said at its face value. That is what we are being asked to judge.
The finger of suspicion points at the members of the Select Committee on a Wealth Tax. Those who set up Select Committees should bear in mind the members who served on that Select Committee when future Select Committees are being formed. I declare a non-interest here because I have never had the honour to serve on a Select Committee.
I accept that if a Committee wishes to deliberate in private and decides so to do that decision should be respected because only the Committee is competent to judge such matters. It is illuminating that Mr. Knight, the editor of The Economist, appeared before the Select Committee of Privileges and asked that the evidence he had given about the confidential workings of The Economist should not be published because commercial aspects of The Economist would be affected by publication. That the paper does not have a lawyer at hand when it is put to bed is probably significant information in some quarters, but that request puts a different light on the answers to the questions.
We are going too far in banning the two journalists from the precincts of the House for six months. It is clearly within the rules, but I do not agree with the rules and hope that they will be changed. Within the rules there are two penalties; one is imprisonment and the other is a rebuke at the Bar of the House by Mr. Speaker.

Mr. Sedgemore: I should like to see it.

Mr. Rooker: I understand that that is a parliamentary occasion. Some of us


who hold marginal seats may not be here to see it, although my hon. Friend the Member for Luton, West (Mr. Sedgemore) probably will. That procedure might be dangerous because of the impression it creates outside the House. Members of the public will not read Hansard or the Report of the Committee of Privileges. They will know only that we have banned two journalists from the House. I should have been much happier if the Committee of Privileges had chosen one of the two penalties within the rules. I do not presume to say which penalty the Committee should have chosen, and so present hon. Members with the precedent created in 1911. It is a long time ago. Times have changed. The composition of the House has changed.
Party political capital could have been made out of the matter, and it is to the credit of hon. Members and the Press that that has not happened. However, I cannot help thinking that it might have been different if the boot had been on the other foot, if the Labour Party had been in Opposition and a quasi-journalist working for my right hon. Friend the present Prime Minister had committed such an offence. I have asked members of the Lobby in the past few weeks what they would have done in those circumstances, and they have replied that they would have treated the matter in the same way as they have treated it now—contempt of the House, a breach of privilege, a journalistic matter. But, down here, my gut feeling is not to believe that. I can write the headline now: "Wilson aide leaks Commons secrets". The slag heap affair would have had nothing on that for a raw, gut, party issue.
Those are the reasons why I support the recommendation in paragraph 9.

11.21 p.m.

Mr. John Peyton: It may be of some help if I speak at this stage.
The hon. Member for Birmingham, Perry Barr (Mr. Rooker) is the real culprit. He raised the matter in the first place. I must say in passing, after his dramatic gestures just now, that he keeps his beliefs in a very odd place. He is welcome to them. I am not in the least jealous. He indicated very dramatically several times, in the full face of the House, exactly where he kept his beliefs.

We were all interested in such a revelation.
It seemed that the main purpose of the hon. Gentleman's speech was to make a few party political remarks to drag in irrelevantly the name of my right hon. Friend the Leader of the Opposition. We are not concerned with that at all. Mr. Schreiber is involved in this matter as a journalist, and nothing else.
I wonder whether we are not in some danger of making rather heavy weather of it all, and of having a protracted debate about what is not a fundamental episode. The right hon. Member for Vauxhall (Mr. Strauss), who was the Chairman of the Committee of Privileges, and who is the Father of the House and greatly respected, spoke with some force, and even at some length. He may have led us all off into the illusion that this is a matter more serious than it is.
My hon. Friend the Member for Southend, West (Mr. Channon) started his speech with such exceeding civility that we were all warned of what was to come. He doubted whether it was necessary to take the action proposed. Then he warned that the House must not be a paper tiger. I agree, but we are in grave danger of becoming exactly that. Again and again when the rules are broken—and rules exist for good reasons—we warn people in the most terrible terms, rather like those used by King Lear, who said something like this: "I shall do the most terrible things. They shall be the terrors of the earth. What they are, I know not."
My hon. Friend added that we should use our undoubted powers lightly. All right, but he did not say what our undoubted powers were. I am not very well aware of what they are, and I do not know of anyone who is trembling lest we should use them.
My hon. Friend also mentioned that others elsewhere—and he particularly referred to Government circles—are guilty of bad conduct. That must be universally accepted, but it is not relevant.
The House is considering a matter affecting Parliament. How the Government conduct their affairs is another matter. I admit that by the way they behave they cause very great difficulties for the Press, which finds it difficult to


distinguish between one member of what is loosely described as "the Establishment" and another and it must learn that it is playing a different game in Whitehall from that in which it is engaged at Westminster. The rules change.
When my hon. Friend ended his splendid speech with the words "The House should temper justice with mercy" it was as if the House was about to visit upon Mr. Knight and Mr. Schreiber the most terrible of penalties. In fact, all that Mr. Knight and Mr. Schreiber are being threatened with is that they may not have the choice of attending these precincts for six months. I know of a number of Members of the House who would not feel too oppressed if they were to be deprived of that very great privilege so long as they could depart from the precincts in the guise of heroes, with, of course, their remuneration. Those Members would not feel unduly inconvenienced or oppressed, and the fact that—wherever they sat—they would be free of the attention of their Chief Whips for six months would not be too intolerable a burden for them.

Mr. Mark Carlisle: Surely the debarring from this place for six months of any journalist must be taken seriously: it is a serious matter for a journalist. It cannot be compared with the question whether a Member wishes to be here. As it appears that no harm was done, as it has been made clear that a rule has been broken, and as it has been made clear that the journalists have apologised, would it not be better to leave the matter as it is?

Mr. Peyton: I do not think that it has been made clear that journalists have apologised, apart from anything else. My hon. and learned Friend may be perfectly right in saying what he said, but I beg him to understand that this is not the most dire penalty that can be imagined for people who are not Lobby correspondents.
The hon. Member for Cornwall, North (Mr. Pardoe) began his speech by, as I understood him, admitting that there had been an undoubted breach of privilege. He went on to make what was, in part at any rate, a very interesting speech that had very little to do with the issue.

He referred to the fiction of the Chairman's report. This is one point which was of some importance in the issue, because this was a draft report. It was a report which was sent to a Select Committee for consideration. I do not know in whose name it should be sent except that of the Chairman, and that does not seem to be a very offensive fiction.
That document was described as confidential. It is up to Committees to accept or adopt what description they like for their working documents. When a document is described as "confidential", that is a warning to all concerned that it is a protected document, protected by the undoubted privileges of the House. As the right hon. Member for Vauxhall knows better than any other Member, if a Committee chooses to apply the description "confidential" to a document, it does so for a good reason—and the privileges of Parliament apply to protect the good working of Parliament. I believe that the hon. Gentleman was wrong in condemning this, as he did, as a rather useless fiction. He reiterated the dire threat of the editor of the Sunday Mirror that there would never be any journalists anywhere near this place again if the House of Commons made such a fool of itself as to adopt this course of action.
With respect, all sorts of people have made all kinds of fools of themselves in this place before. But I do not believe that we would be making wise men of ourselves if we lightly rejected rules which had been adopted over many years for the protection of the workings of Parliament, upon the efficiency of which so much depends.
I am quite prepared to accept that there are probably two words today which are not highly cherished and do not enjoy great public esteem. One is "privilege", and the other is "politician". The privilege is resented, and the politician is suspected. The combination of the two is almost universally abominated.
But do not let us hesitate on occasions like this to make it clear that parliamentary privilege is not an affair conferring upon individual Members of Parliament privileges and rights which are not enjoyed by ordinary members of the public. Parliamentary privilege is a right


conferred upon Parliament in order that it may efficiently perform its duties, one of which at least used to be the maintenance of the liberty of the individual. It is this that I take seriously, and nothing else. It is the protection of the individual against the excessive power of anyone, especially the excessive power of the State, and we have to be watchful lest Parliament's powers should be further eroded and weakened.
The position of the Select Committee is that it has over the years, long before I had the privilege of being a member of it, again and again declined to help individual Members of Parliament who felt themselves outraged by scurrilous and often dirty and unwarranted attacks in newspapers, many of them not particularly reputable newspapers. We had a case the other day directed against the hon. Member for Liverpool, West Derby (Mr. Ogden). The Committee, though expressing some sympathy with him, declined to assist and said that if he had any remedy, it lay elsewhere.
It must be made clear that Members of Parliament also can be and have been guilty of breaches of privilege. So do not let us hesitate to underline once again that the privileges of Parliament are not special ones conferring special benefits upon Members of Parliament.
I turn for a moment to The Economist. its editor, and Mr. Schreiber. I am sorry that this extremely reputable organ and two people enjoying the reputation that Mr. Knight and Mr. Schreiber enjoy should have become involved in this dispute, which I do not regard as being of fundamental importance.
But we have these facts. We have a Chairman's draft report which at that stage had not been accepted by his Committee. I think it is worth while reminding ourselves that, in the event, all that the Committee was able to agree to was not the draft report, much of which was reported in The Economist, but:
Your Committee have been unable to agree upon a Report and have decided therefore to report the Minutes of Evidence, both written and oral, to the House. We have been unable to accept the Chairman's first draft report, as amended, for a number of reasons, notably the failure …
and then there are three reasons.
That was a succinct and not particularly constructive report on a not particularly

satisfactory proposal which had come from the Government. That is another matter and I do not want to go into it now.
The position is that there was a Chairman's draft report which had not been approved, which was marked "confidential" and which was improperly passed on. The fact that the real culprit, whoever it was, who passed it on has never appeared is not particularly relevant.
The question which we have to consider, and which the Select Committee had to consider, is what Parliament should do: stand aside and say "We do not mind" and take no notice if people outrage and break our rules, or make some gesture of disapproval? If the Committee said "We do nothing". we would be saying, surely, that anyone behaving in a similar manner in future and breaking the rules would be excused simply because others had done it before them and we would not then be justified in taking action. The Press would be left in a state of even greater uncertainty. That is intolerable. The matter needs much greater and more detailed examination than arises out of one case.
I suggest that the Select Committee of Privileges, which is, incidentally, an all-party body, and which was on this occasion, as on others, unanimous, should not be overturned without careful thought. We decided that the House would be right to make at least some gesture of disapproval and have advised Parliament to give some public notice of its concern. I believe that the Committee was right in making what I believe was only a modest gesture, or recommending that the House should make only a modest gesture of its concern that its rules, which are not foolish, should have been broken in this manner.
I do not believe that the penalty suggested by the Committee is as dire as some hon. Gentlemen have suggested. I hope that the House will be disposed to accept the Committee's recommendation.

11.39 p.m.

Mr. Douglas Crawford: I would remind the right hon. Member for Yeovil (Mr. Peyton) that the Select Committee is not an all-party body because all parties are not represented on it.
I declare an interest in this in that I am a member of the National Union of Journalists and I confess that I am surprised that the House is debating this at all, because it is making itself a laughing stock in the country. The issue is one of finance. I quote Charles Dickens who, at a meeting of the Administrative Reform Association in 1855, described the
savage mode of keeping accounts on notched sticks … introduced into the Court of Exchequer".

Mr. Nicholas Fairbairn: He was an Englishman.

Mr. Crawford: He was. He said:
I dare say there was a vast amount of minuting, memoranduming, and dispatch-boxing, on this mighty subject. The sticks were housed at Westminster, and it would naturally occur to any of us unofficial personages that nothing would have been easier than to allow them to be carried away for firewood, by some of the many miserable creatures in that neighbourhood. However, they never had been useful, and official routine could not endure that they ever should be useful, and so the order went forth that they were to be privately and confidentially burnt. It came to pass that they were burnt in a stove in the House of Lords. The stove, overgorged with these preposterous sticks, set fire to the panelling; the panelling set fire to the House of Lords; the House of Lords set fire to the House of Commons; the two houses were reduced to ashes; architects were called in to build two more; we are now in the second million of the cost thereof; the national pig is not nearly over the stile yet; and the little old woman Britannia, hasn't got home tonight.
We are in danger of making as big fools of ourselves as he suggested was done then.
But, to be serious, my party believes in the Scottish doctrine that the sovereignty of a country should rest finally with its people and not with its Parliament. We accept that the people have a right to know how their elected representatives are conducting themselves. Hence our amendment. I find it incredible that hon. Members should think that those who elect them do not have the right to know what they are doing in any Committee or in the Chamber. I say this with the usual proviso that there should be some secrecy over matters of public safety or national security.

Mr. A. J. Beith: So there are some circumstances in which

secrecy should be protected. How should it then be protected?

Mr. Crawford: By such things as D notices. But this was not a matter of national security.

Mr. Spearing: Is not the hon. Gentleman wrong here? Before a report is published, the draft report, as amended, is known and the public can see what the Committee is doing.

Mr. Crawford: But it is important to the public to know how the Committee reaches its conclusions.
I would refer the House to the much easier systems of government in the United States and Sweden and to my party's own statement on the Scottish Assembly and a future Scottish Parliament—that all Committees will be open, with all interested parties called as witnesses and all the deliberations broadcast, in the fullest sense of that word.
I agree that there has been a technical breach of privilege in this case. Many hon. Members have said that the editor of The Economist agrees with that. In a debate on this subject in July 1969, the right hon. Member for Ebbw Vale (Mr. Foot) said that the matter of privilege was ill-defined. He was so dissatisfied with the way the privilege issue was left that he said that he would filibuster until it was better defined.
I believe that this is only the third Select Committee of its kind to sit since the war. There is no doubt that it discussed these matters in a political way. Copies of the draft report were shown to the members of the Committee and may have found their way into the hands of the TUC or the CBI. It has been suggested that it may have ended up in the hands of the Treasury or the Inland Revenue. If so, that, too, was a breach of privilege.
But there is a deeper issue than the technicalities—that of open government. Both major parties say that they favour open government. As The Guardian said today:
In the ten days since the Privileges Committee reported, we have penetrated, leak by leak, deep into the heart of Cabinet debates about Chrysler and about the level of public expenditure cuts.
My party believes firmly in open government and has said so. We have said that


when we get a self-governing Scotland, we shall practise what we preach. As a start, we shall vote against this motion.

11.43 p.m.

Mr. Kenneth Baker: Before briefly supporting the Conservative amendment, I should declare an interest, in that Mr. Schreiber is a personal friend of mine and I have known him for some time. But I should be making this speech even if that were not the case.
The reason that I am opposed to the Committee's recommendations goes back to an occasion shortly after I entered the House. In July 1968—one of the debates I remember most vividly—the hon. Member for West Lothian (Mr. Dalyell) was tried by the House. It was a disgraceful and grisly performance. Having heard the whole debate, I made a personal resolution that if such a matter were to come up again when I was still a Member, I would try to persuade my colleagues to deal with these delicate matters in another way. That is why I oppose the motion.
I accept that Mr. Schreiber and Mr. Knight have breached the rules of the House—rules agreed as recently as 1971. The Select Committee of Privileges condemns Mr. Schreiber's action as wholly irresponsible and Mr. Knight's reckless. I do not disagree with that. However, what I do disagree with is that, having come to that conclusion, we are then left to impose a penalty upon them for that breach. I am not sure whether the Attorney-General or the Leader of the House will be winding up the debate tonight.

The Attorney-General (Mr. S. C. Silkin): No one will wind up, but I hope to intervene.

Mr. Baker: If the Minister manages to intervene I ask him to address himself to why we should introduce the particular penalty of excluding journalists from the precincts of the House. We have not used this penalty for over 200 years. We have to go back to the Hansard and privilege debates of the eighteenth century before we come across this sort of penalty. There are only two recent occasions when Reports of the House recommended exclusion of journalists—one in 1899 concerning The Times Lobby correspondent,

and the other in 1901, again concerning The Times Lobby correspondent, who is always looking for scoops. It was recommended that they should be excluded from the inner Lobbies of the House. Those Reports lie upon the Table of the House. As far as I know they are still lying there, because our predecessors had the good sense not to take any action upon them at all.
The second point which perhaps the Attorney-General will deal with concerns the disparity of treatment between this case and the most recent case—namely, the case concerning the hon. Member for West Lothian in 1968. Perhaps I can briefly remind the House of the circumstances of that case because it was strikingly similar to what occurred over The Economist. The hon. Member for West Lothian gave to journalists on the Observer a highly confidential Report of a Select Committee. The Observer printed it on its front page. The hon. Member for West Lothian immediately admitted that he had released the Report. The Select Committee of Privileges recommended that the Member should be reprimanded, and thus there was the trial to which I referred earlier. However, the journalists, who had committed exactly the same offence as that of Mr. Schreiber and Mr. Knight, were just held to be in contempt of the House and nothing was done to them. Therefore, my question to the Attorney-General and to the members of the distinguished Select Committee who are still present is that if this were the action in 1968, what particular features of this case have caused an additional penalty to be imposed?
It would appear to an outsider that the journalists are being more heavily punished because the source of the leak has not owned up. That does not seem to be fair. I know that this is a subjective and personal judgment and that the matter was debated in 1968. My right hon. Friend the Member for Chesham and Amersham (Mr. Gilmour), the Shadow Home Secretary, made a distinguished speech in that debate and put forward the proposition—with which I know some hon. Members may not agree—that the guilt was in the giving and not in the receiving of the Report. He took the view that as long as it was not against the national


interest the Press should publish and, if necessary, be damned.
My third point concerns the seriousness of the offence. How serious was this offence? In paragraph 3 of its Report the Select Committee says that it was
damaging to the work of Parliament".
I can appreciate that when the Select Committee came to put its Report together it was rather egg-bound, but was this really
damaging to the work of Parliament"?
I do not believe that it was. I believe that the matter is out of perspective. In the next sentence the Select Committee says,
their deliberations in Committee must be conducted in the knowledge that they are and will remain private, and free from outside pressure.
Is this living in the real world? As representatives of constituencies we are constantly subject to outside pressures. What was the railwaymen's lobby doing this afternoon? In my view it is absurd to say that the members of the Select Committee would be subject to outside pressure. Knowing many of them, I do not believe that they were. We are exaggerating. The central issue concerns the need for secrecy. Several hon. Members have pointed out that there are leaks from Government day by day and, as my hon. Friend the Member for Southend, West (Mr. Channon) rightly said, when it suits politicians to leak, politicians leak.
My right hon. Friend the Member for Yeovil (Mr. Peyton) said that even if Ministers and Governments do this, we should now allow it or encourage it in the House of Commons. I ask my hon. Friends whether the general public can distinguish leaks from a Select Committee, from the Government about Chrysler or about the Chancellor's proposals tomorrow, or a leak from the Cabinet. The reality is that these things occur.
The reason why this House has over the centuries created privilege for itself is that we must be free to stand up in this Chamber to say what we want, without fear or favour. No one can stop us. That is what our free speech as Members of Parliament means. We can speak freely to Ministers about our constituency problems and interests and no one can take action against us in any court in the land. That is the central point of

privilege. That is what privilege is all about. That is why we as an institution have, over 700 years, protected that central core.
It is because that freedom is so important that infringements of it and penalties deriving from infringements are rarely invoked. I quote from my predecessor in my constituency, Lord Hailsham, who said in this House in 1969:
On the whole, I consider that the majority of privilege questions raised at 3.30 in my lifetime have done more harm than good to the reputation of the House. Some have been necessary. Some have been wholly unnecessary. A great number have been in the grey area about which opinions differ."—(Official Report, 4th July 1969; Vol. 786, c. 898.]
Hon. Members have mentioned the famous statement in "Erskine May" about our powers over privilege. May I remind the House what it says. It reads:
Parliament should use its powers to protect itself, its Members and its Officers only to the extent absolutely necessary for the due execution of its powers.
I ask hon. Members to try to put this incident in perspective. Are we not exaggerating far too much our position and the slight that has been done to us? When we impose, or seek to impose, a penalty of whatever sort, are we not in danger of putting ourselves in even greater contempt?

11.53 p.m.

Mr. John Mendelson: In the past 15 years, partly through the influence of my right hon. Friend the Secretary of State for Employment—who has already been mentioned by hon. Members—the trend in debates on privilege issues has been away from the frequently heavy-handed use of this power, with the consent of hon. Members. It is important that this matter should be debated, to some extent beyond the immediate case, so that this trend should not be disturbed or replaced.
I hope that my right hon. and hon. Friends will not proceed with this motion. I hope that it will not be pressed to a Division. That would be the best outcome. It is much to be preferred to a vote on the amendment, which I would have to support if a Division were pressed.

Mr. Channon: If the motion were not pressed I would naturally seek to withdraw my amendment.

Mr. Mendelson: I am grateful to the hon. Member.
I believe that my right hon. Friend the Member for Vauxhall (Mr. Strauss) has done his duty in drawing the attention of the House to this case. My hon. Friend the Member for Birmingham, Perry Barr (Mr. Rooker) who first brought this matter before the House has very rightly expressed his doubt as to the sentence which is being sought. A consensus is gradually emerging on both sides of the House which is suggesting that we should not proceed with the proposed punishment.
It would have been quite wrong to ignore what has happened, for the reasons given by my right hon. Friend the Member for Vauxhall and that is not infrequently the case. That is why the final decision always rests with the House. I did not agree with the reasons urged by my right hon. Friend the Member for Vauxhall in his description of parliamentary privilege. The right hon. Member for Yeovil (Mr. Peyton) said that the term "privilege" was totally misleading and that most hon. Members wished that they could invent a better term which would be better understood by our constituents. But the purpose of parliamentary privilege has little to do with the reasons advanced by my right hon. Friend the Member for Vauxhall.
The point of privilege is not to enable Members of Parliament to do their work in peace, or to enable agreed conclusions to be reached in a Select Committee. There is no mention in early historical documents of Select Committees achieving unanimity. That consideration was read into the history of privilege by the historians. The precise reason for privilege is to prevent people from threatening Members of Parliament in the exercise of their duties on behalf of their constituents. All our actions in these matters should be judged solely according to that criterion. All others should be discarded.
There are circumstances in which the contempt would be serious whether or not great harm was done to the public interest. Most hon. Members have been members of Select Committees and therefore can appreciate that the situation could arise in which considerable severity would have to be applied by the House. For a period I was a member of the Public Accounts Committee. If documents studied by the members of that Committee were to be revealed to non-members. I should be prepared to support a severe

punishment on those who committed the breach. My point in saying that is that it buttresses my contention that it matters very much whether great harm is done to the public good or no harm is done.
We are talking about a matter as public as the wealth tax. What can be more public than the future wealth tax We are considering pioneering legislation about an entirely new sphere, so we should make it as public as possible.
The tendency in this House has always been for the Government and the Crown secretly to impose new imposts with no one having the right to write about them. It took a long time to break that down.
There has been an increasing tendency to break down secrecy. Surely we should not now march in the wrong direction. It is suggested that it is a solemn crime to disclose a first draft of a Select Committee's Report, especially one pioneering a new tax. I should have thought that the philosophical intent of greater freedom for citizens, the principle of no taxation, not only before representation but before the widest possible discussion throughout the land of those about to be taxed, is marching altogether in a different direction. Therefore, a feeble case could be built for secrecy in this situation.
Enough has been said to support my second point. A consensus is growing in the House that on this occasion although it would have been quite wrong for the principals involved to ignore the case and although it is right for my right hon. Friend the Member for Vauxhall and his colleagues to report the case to the House and tell us about the circumstances, it would be equally right for my right hon. Friend the Attorney-General not to press the motion and for my right hon. Friend the Member for Vauxhall to agree that it should not be pressed.

12.02 p.m.

Mr. Hugh Fraser: I hope that the right hon. Member for Vauxhall (Mr. Strauss), Chairman of the Committee of Privileges and Father of the House, will proceed with the motion before the House. It is proper that he should. I also hope that the Leader of the House will give us the benefit of his wisdom on these matters.
We are moving into an area of confusion. I enjoyed the remarks made by the hon. Member for Penistone (Mr.


Mendelson). However, we seem to be moving away from the main subject before the House, that is, the question of the privilege of this House, and concentrating on secrecy or the Official Secrets Act. I have offered to give evidence at the Old Bailey in defence of the right of people to know. My hon. Friend the Member for Thanet, East (Mr. Aitken) has been proved innocent on these matters. I was not proved innocent, but at least I offered to appear before the High Court of the land to defend the right of the people to know. With great respect to the hon. Member for Penistone, that is not the issue before us tonight. It is not a question of the right of the people to know—a point made by the hon. Member for Perth and East Perthshire (Mr. Crawford). I can imagine nothing more tedious than the proceedings of Scotland under the Scottish National Party, when every jot and tittle is reported by radio and television.
It is not a question of secrecy; it is a question of the rules of this House. This is what we are debating. The relationship between the Press and Parliament, between our estate and the fourth estate, is a delicate one. There are many who say that the Lobby should be abolished altogether, because then we would have fewer leaks, becks and nods from Ministers and Leaders of the Opposition. I should like the Lobby abolished because the only good journalists that I know are those who do not get becks, nods and whispers but those who go out and fight for their facts.
However, this is quite a different matter. We in this House have this relationship with the Press. It is of a very special sort. What has happened is undoubted. The main offence against the House was undoubtedly committed by a member of the Select Committee on a Wealth Tax, and whoever that was, he was the villain. Nevertheless, in that sense the punishment of the two gentlemen concerned is not a very serious imposition of penalty. It is in a sense a vicarious punishment of that person, from whichever party, who disobeyed the instructions of the House. This is the point which was well put in a question asked by the Leader of the House, which is the only evidence that I want to quote from the Report. He said,

At the top of the covering page it says: 'Knowledge of the contents of this document should be confined to Members and staff of the Select Committee'.
It was not even a secret document. It was a confidential document between members of the Press and Members of the House of Commons.
I am not saying that this a good way to work the system, but this is the way in which the system is worked. We know that we have had tribunes of the people, and a tribune of the Press rather than the people from Marylebone talking about the rights of Press and people against Parliament and so on. The point is to make Parliament work. The only way and the best way to make Parliament work is to stick to the rules. If we do not stick to the rules, there will come occasions when these can be abused, either by Members of the House using the Press as a leak for political reasons or by the Press putting pressure on Members of Parliament.
The great mass of the people are unmoved by these matters. Certain hon. Members have today been moved by little snippets that have appeared in various journalistic newspapers, such as The Times or The Guardian, which stick up, quite rightly, for their fourth estate, the estate of the Press. However, I warn hon. Members that if they oppose the motion moved by the Father of the House they will be doing a great disservice because they will be making an attack upon the way in which and the principles on which the business of this House is conducted.
Follies may be committed by hon. Members. We may look foolish in the eyes of certain journalists. But we shall look really foolish if we destroy the present workings of the House, which are effective and are the only way that our freedoms are preserved.

Mr. Deputy Speaker (Mr. Oscar Murton): Mr. Attorney-General.

Mr. Dennis Skinner: rose in his place and claimed to move, That the Question be now put, but Mr. Deputy Speaker withheld his assent and declined then to put that Question.

12.8 a.m.

The Attorney-General (Mr. S. C. Silkin): This has been an extremely valuable debate—valuable whether or not


the motion moved by my right hon. Friend the Member for Vauxhall (Mr. Strauss) is accepted by the House, because it has brought out the important aspects of the particular case that we are dealing with. It is a case which is not unique as has been said.
I agree entirely with the right hon. Member for Stafford and Stone (Mr. Fraser) that in a debate of this kind there is a very great danger that one may fall into the trap of dealing with a subject that is different from the subject of this Report. There are different views as to the desirability of the proceedings of Committees being taken in public or in private. I must say, in parenthesis, that I am particularly pleased that in the course of this discussion, as with one of the recent Reports of the Select Committee, notice is at last being taken of the Report of the Select Committee on Parliamentary Privilege in 1967, over eight years ago, in which that subject was discussed very fully.
That Committee took the view that we should move towards greater flexibility, greater relaxation and a greater degree of open government. The present position is one in which that problem does not arise. We are dealing with a document that was marked as being confidential and that was protected by the rules of the House. Whether we think that it should not have been confidential, or whether we think it should have been distributed to all Members before the Select Committee discussed it, is not the point at issue. The point at issue is whether it is right that such a document should be permitted to be published without the consent of the House and without even the most trivial of penalties.
The House is in a difficulty about penalties. It can send people to prison for the rest of the Session, although I do not think that that has been done for the past 80 years. It can go through the procedure that some of us saw when my hon. Friend the Member for West Lothian (Mr. Dalyell) was solemnly rebuked whilst in his place. I think that all of us who were present on that occasion took the view that that should never happen again, whether from an hon. Member's seat or from the Bar of the House. That is all that the House can do, except impose the sort of penalty that, in this instance, the Select Committee has recommended.

Mr. John Cope: Does the right hon. and learned Gentleman think that this is a good moment to invent a new and unsuitable penalty after the offence?

The Attorney-General: It is not the invention of a new penalty; it has been suggested before. Apart from that, the House has the right and the duty to control its own administration and to manage its own affairs. It has every right to do what is proposed in paragraph 9 of the Report.
It is not in dispute that this was an act of contempt by both Mr. Schreiber and his editor. One of the matters that I find extraordinarily difficult to understand is that journalists are saying forcefully that it is wrong that they should reveal the identity of their confidential sources while being prepared to reveal the confidential document that comes from those sources. In my view it is not a logical position for journalists or the House to adopt.

Mr. Fairbairn: Is it not the case that there is no doubt that there was a deliberate breach of faith by a member of the Committee, and that that breach was used by members of the Press? Is that not true?

The Attorney-General: The evidence suggests very strongly that that was the case. It is admitted by Mr. Shreiber and Mr. Knight that they well knew that this was a confidential document. Although they did not both say that they knew for certain that they were committing a contempt deliberately, one said that he was 60 per cent. or 70 per cent. sure and the other admitted that he knew. These were deliberate actions, knowing that what was being done was what the House forbade and what the Select Committee intended to forbid. That was the reason why the draft Report was marked as it was.
It is a free vote tonight, and I am speaking only as a member of the Committee. It is open to the House to say "We shall do nothing about it." I suggest that it is important that it should not be seen to be an offence that can readily be repeated. That is the reality of the harm that might be done. It is not the particular harm in the particular case that is involved; it is the harm of


doing nothing in circumstances in which that deliberate action has been taken.
I hope that the House will support the motion to make it clear to the public, hon. Members and members of the journalistic profession that although this behaviour happened in this case it must not happen in the future.

12.17 a.m.

Mr. Jeremy Thorpe: I have never sought to extend privilege of secrecy. I think that I am the only Member of this House who, when practising at the Bar, has acted professionally in a case that went before the Privileges Committee—and I am glad to say that the matter was taken no further. Therefore, I have been on both sides of the fence.
I do not regard this as an argument whether one is in favour of open government or private government. That is not the issue. There is a simple question: are there circumstances in which Parliament should be allowed, in a Select Committee, to deliberate in private? In my view, the only circumstances in which one can say "Yes" is in a case in which it can be shown that privacy prior to publication of a Report is in the interests of Parliament collectively and of the country as a whole.
I remember a case that was referred to us by a former Member of this House, It was a complicated matter, which took up the time of the Privileges Committee for many weeks. We faced the great difficulty that the Member concerned could have taken action in the civil courts. We knew that there was a possibility of a distinguished political journalist being involved and also that people wanted to give evidence to the Select Committee. We were aware of the fact that if that evidence were made public we might have prejudiced the civil action, and that our deliberations might be in conflict with a civil court.
For that reason I believe that it was absolutely right that we considered those matters in private. Subsequently, we felt that we were inhibited from acting, because the matter was proceeding in the courts. Had those matters been debated in public, I cannot think that it would have occasioned a fair trial if an action for defamation were brought. We were

also told that it was possible that at a subsequent stage criminal charges might arise. Again, therefore, it was right and proper that the matter should have been considered by the Select Committee in private.
I believe that recently this House acquitted itself in a sensible and proper way when an extremely difficult case came before it relating to the Yorkshire Branch of the NUM. I remember that on that occasion we would not have been able to come to a correct decision if we had not had full and frank discussions in private between all Members, representing a wide spectrum of political opinion in this House.
There have also been occasions when witnesses have asked to sideline certain parts of their evidence, because there were certain aspects of the evidence which they did not wish to be published. We said that we would have to decide whether it was reasonable. It was reasonable, it did not detract from the value of the Report, and it provided valuable background information, which assisted us in reaching our conclusions. There are occasions, provided they are used wisely, when it is reasonable to ask that a Select Committee should be able to debate in private. Government behaviour should not be the guide. If anything, we should set higher standards.

Mr. Joseph Ashton: Surely the argument is not whether Select Committees should be able to sit in private but whether these journalists should be punished for getting hold of a story and publishing it?

Mr. Thorpe: I am coming to that question in a moment.
I would have thought that publication of the Crossman diaries would inhibit members of contemporary Cabinets, particularly from now on, if they felt that proceedings were being mentally noted for future use. Patients of the late Lord Moran might have felt inhibited about discussing their ailments in great detail if they knew that professional confidentialities would be breached.
The system of advance warning of the Press is profoundly unsatisfactory. With very few exceptions, Lobby correspondents honour embargoes in White Papers, but it is outrageous that they should have 24 hours' or 48 hours' notice, ahead of Members of Parliament.


I would like to see simultaneous embargoes for the Press and hon. Members. There should be nothing to prohibit the Press from discussing matters with hon. Members, on the understanding that if views were reported in the Press, or on radio or television, before the embargo expired it would be an indication that those doing the publishing did not wish to enjoy the privilege in future.
We are asked whether it matters that it was the Chairman's Report. Perhaps we ought to examine what should and should not be confidential, or matters of privilege.
I think the hon. Member for Penistone (Mr. Mendelson) was putting forward the parlourmaid argument—that she had given birth to an illegitimate child, but it was only a little one. If we ask for the right of a certain degree of confidentiality, we either defend it or we do not. If we are demanding too much confidentiality, it is for us to amend the situation.
In 1956, I was prevented from publishing certain evidence on behalf of a client on the question of Suez and the allocation of petrol by hon. Members. We have been too sensitive on this issue, but if we attach importance to the discussion of matters in private, we can prove that only by asserting that right and defending it when it is breached. That is my answer to the hon. Member for Bassetlaw (Mr. Ashton). The fact that we have not found out which hon. Member was involved should not inhibit the House from defending its rights.
There has been a breach. The only question is whether this is an excessive penalty to inflict on the journalists. The major penalty is obviously ruled out, and the six months' ban is the only alternative, unless we do nothing and say that we are sure that it will not happen again. I do not see how we can be that certain. If we agree that there are occasions when it is reasonable for the House to deliberate in private before releasing a Report that will be made public and will be debatable in public, are we prepared to defend that course by taking action as the Select Committee has suggested to the House? I think that the House will wish to support the Committee.

12.25 a.m.

Mr. George Cunningham: In our system the House normally treats the recommendations of its Committees with disdain. More frequently, the House totally ignores its Committees' recommendations. I do not suggest that the House should automatically accept any recommendation of any Committeee, but there is a special consideration to be taken into account in considering Reports by the Committee of Privileges. None of us can be happy with the procedure whereby we sit effectively as a court of law, with power to impose a penalty, but are not equipped as a court of law. There is no representation, and none of the normal defences to safeguard a defendant. That is one reason why the initial consideration of the issue is handed over to the Privileges Committee and, thank God, the proceedings within the Privileges Committee are more detached, calmer and a bit closer to the atmosphere of a court than are the proceedings on the Floor of the House. Therefore, the House should always give the benefit of the doubt to the recommendation brought forward by the Privileges Committee in a case like this.
The Father of the House—the Chairman of the Committee—referred to the amusing and amazing request made by The Economist, at the end of the hearing, that part of the evidence given by the two journalists to the Committee should be protected. Had the Committee acceded to that request The Economist would have relied for the observance of that degree of secrecy upon other newspapers adhering to the rules of the House more honestly than did The Economist on this occasion. That is a rather ironic touch.

Mr. Michael Latham: Will the hon. Gentleman quote from the evidence the passage in which The Economist asked for evidence not to be published?

Mr. Cunningham: I am speaking from memory—

Mr. Cledwyn Hughes: If it helps the hon. Member for Melton (Mr. Latham), I can tell him that the reference is on page 15. In answer to a question asked by my hon. Friend the Member for


Bethnal Green and Bow (Mr. Mikardo), Mr. Knight said:
If it is within the discretion of the Committee what is published I would like an opportunity of making representations to you in that regard.

Mr. Cunningham: That is the passage I had in mind. It was clearly a request to have the opportunity to make some part of the evidence secret if, having seen it, The Economist decided that it wanted to do so. Most people who make a similar request to a Select Committee do so in that provisional way. They want to look at the first statement of the evidence to see whether they want to request sidelining. So my point stands.
We are all embarrassed that the two journalists are identified but the Member of the House who is the principal culprit is not. It would have been offensive for the Privileges Committee to subject the members of the Select Committee on a Wealth Tax to questions on oath as to what they had or had not done. If, in future, in a similar situation, it is accepted that a Member is the principal culprit but we have managed to identify only the secondary culprits, we should consider putting Members on oath, so that if they said on oath something that turned out later to be untrue they would be committing a criminal offence.

Mr. Michael Brotherton: The hon. Gentleman speaks of putting Members on oath. Does that mean Members subscribing their signatures?

Mr. Cunningham: It is perfectly possible for Select Committees to subject Member witnesses to giving evidence on oath. If I remember correctly, doing so brings the offences under the provisions of the criminal law. In a situation like this, where a Member unknown is accepted to be the principal culprit, before punishing the secondary offenders we should subject Members to that treatment.
It has been mentioned that the document in question was marked as confidential. The right hon. Member for Yeovil (Mr. Peyton) said that it was marked "Confidential", but the actual marking on the document was not in those terms. It is a consideration for the future that if we are to have secret or confidential documents of the House—as against documents of the Government—which are

secret, confidential or restricted, we should adopt the traditionally accepted markings, with "House of Commons—Secret" or something like that marked on them, so that it is understood that the requirement of confidentiality is as binding as a normal security classification on a Government document.

Mr. Fairbairn: The hon. Gentleman raises a most important point. The originator of the leak has chosen to remain secret and those who published what he leaked have contained his secrecy. I believe that it is right that the person who leaked have contained his secrecy. I bepal conspirator, but let us be in no doubt that the protection of a conspirator, which is the position in this situation, is equally difficult.

Mr. Cunningham: In any situation in which people are accused of offences, it is not at all uncommon that one does not manage to catch all of them. One does not refuse to proceed against two persons whom one has identified, on the ground that one has not identified the other, even if the other has been guilty of a more heinous offence than have the first two.
I strongly agree that we have too much secrecy in British Government. I do not think that we have an excessive degree of secrecy in the House of Commons, but in respect of the wealth tax I think that it would have made sense if the Committee had held all its sittings, including its deliberative sitting, in the open. But it did not, and that was its right.
I recall a Select Committee on which I served two years ago, which decided to conduct an investigation into a very sensitive matter that has lately received much publicity, relating to the Crown Agents. We decided to take evidence in private because we knew that that was the only way in which we could get hold of confidential information, and we decided that at the end of our proceedings we would consider how much of that information to make public. Our deliberative sittings were therefore bound to be in secret, and many of our other sittings were in secret as well. One cannot protect the desirable secrecy of that kind of operation unless one always protects occasions when a Committee has decided to go secret, even if one disagrees with its judgment that this was an occasion


on which secrecy was required. The decision can only be one for the Committee to take.
I suppose that in setting up a Select Committee on, say, the wealth tax, we could decide that the subject is of such a nature that all its deliberations must be in public. If we said that, the Committee would know where it stood. Otherwise, the decision must be left to the Committee.
Sufficient mention has not been made of the fact that Mr. Schreiber refused to reveal his source of information. I would not expect him to do otherwise, and in his situation I would do the same. But in his situation, I would expect to be punished for it. A journalist is entitled to say that he will make a judgment and withhold information that is legally required of him by a court of law or by a House of Commons Committee, but he must not then say that he should be let off the penalty for doing so. To be fair to Mr. Schreiber, he has not asked to be let off the penalty. But, if we let him off the penalty, the sanction will not exist in other cases in which Committees have had secret deliberations when the secrecy was far more important than it was on this occasion.

12.35 a.m.

Mr. Paul Hawkins: I agree entirely with the right hon. Member for Devon, North (Mr. Thorpe) about the importance of Members of this House receiving notification of the publication of any Select Committee Report at the same time as journalists receive it. In this case, the members of the Select Committee on a Wealth Tax knew that they would not be receiving the published report of the Committee at the same time as the journalists did. They knew that the journalists would receive it 48 hours before. The members of the Committee that had produced the Report would not have been allowed to see the printed Report. That situation needs altering. Members should have the right to see these Reports at the same time as journalists do.
I want to raise one or two matters about the proceedings of the Select Committee which I think the House his misunderstood. The Chairman of the Committee, together with an adviser employed by the Committee, produced the Report that was referred to as having been leaked

during the recess. If my memory serves me right, copies were sent by post to members of the Committee. I do not know whether the Committee of Privileges ascertained how many copies of the Report were published—

Mr. Strauss: Yes, it did.

Mr. Hawkins: In any event, copies were sent by post. It has been said time and time again that it must have been a member of the Select Committee who leaked the report, but I cast doubt on that suggestion, because there were copies of the Report floating around, and I believe that it could have been leaked in some other way.

Mr. Strauss: I am sure the hon. Gentleman does not want to mislead the House. There were not many copies hanging about. A limited number were printed. All but a few went to members of the Select Committee on a Wealth Tax. The few that did not were accounted for, and held back. No copies went to the City, or to any Government Department.

Mr. Hawkins: I was not suggesting that.
The right hon. Gentleman talked about the deliberations of the Select Committee. In fact, there were no deliberations on the Report before it was leaked. The Report was made up during the recess and copies were posted to members of the Committee. It is quite possible that it was seen by someone before it was received by those who served on the Committee. In any event, it does not appear to members of the Committee to have made any difference to the proceedings of the Committee. I do not believe that in this case it has caused any damage.
I do not defend what the journalists did. I think that they did something that was totally wrong. I agree that notice of this should be taken, but this was a special case. No damage was done, and this did not affect our judgment in any way.

Mr. Deputy Speaker (Mr. George Thomas): Mr. Lipton.

Mr. Skinner: rose in his place and claimed to move, That the Question be now put, but Mr. DEPUTY SPEAKER withheld his assent and declined then to put that Question.

Mr. Ashton: On a point of order, Mr. Deputy Speaker. Surely it is the practice on Fridays, after the debate has continued for two and a quarter hours, that Mr. Speaker accepts such a motion.

Mr. Deputy Speaker: There is one big difference—it is not Friday.

12.40 a.m.

Mr. Marcus Lipton: I object to the attitude of certain hon. Members, who seem to think that nothing much has happened and that no action need be taken. That was the tenor of the argument advanced by the hon. Member for Southend, West (Mr. Channon) and other hon. Members.
My main objection is to the contempt with which the Committee of Privileges has been treated by Mr. Knight and Mr. Schreiber. Those two gentlemen refused to answer the questions put to them. The Committee came to the conclusion—I do not know whether this conclusion is accepted by hon. Members who have spoken—that the conduct of Mr. Schreiber was wholly irresponsible. Whether hon. Members agree with that or not, they cannot gloss it over as a matter of no importance.
We have been told that there were no copies of the draft Report circulating except to members of the Select Committee on the Wealth Tax and to current members of the staff of the House. What strikes me as particularly odd is that neither Mr. Knight or Mr. Schreiber answered questions put to them by my right hon. Friend the Member for Fulham (Mr. Stewart) who, at Question 107, asked:
You will not tell us your source. That means that all the Members of the Committee and their staff are left under the general smear of having behaved in an unsatisfactory way?
The answer was:
I do not wish to be asked to make moral judgments on anybody from whom I may or may not have obtained this information.
After the Committee of Privileges had completed its deliberations and decided to make its Report, it received a further communication from the editor of The Economist withdrawing any imputation against members of the staff of the House. So at least the staff have been exonerated. But Mr. Knight and Mr. Shreiber were never asked whether they were prepared to exonerate any hon.

Member from the charge which they withdrew against the staff of the House.
The letter from the editor of The Economist to the Chairman of the Committee of Privileges, which appears at page 19 of the Report and which is undated, obviously arrived after the Committee had completed its discussions. That is why I think that the whole position is unsatisfactory in the highest degree. The Committee was treated with contempt by these two gentlemen, and the penalty proposed is ridiculous.
The proposed penalty is that these journalists must not come to the precincts of the House for six months except for the
purpose of interviewing, in their capacity of constituents, their Members of Parliament.
We do not know who their Members of Parliament are. We do not know whether one Member represents both these gentlemen or whether there are two Members.
How is the penalty to be enforced? Are they to come to the Central Lobby and hand in a green card, asking to see a particular hon. Member? Will that hon. Member be allowed to bring them into the Strangers' Bar, or into the Cafeteria?
The whole thing is ridiculous. Either one imposes a penalty or one does not. This kind of penalty makes nonsense, and I refuse to have anything to do with the whole business.

12.45 a.m.

Mr. Jonathan Aitken: I cannot agree with the hon. Member for Lambeth Central (Mr. Lipton) in his demand for a much tougher penalty, but I agree with him that the penalty is the central issue of the debate.
I agree with my hon. Friend the Member for Southend, West (Mr. Channon) that there has undoubtedly been a breach of rules in this matter, but I believe this penalty to be a grave overreaction, and the use of a sledge hammer to crack a nut. There were several ways in which the Committee over-reacted. They were selective in singling out the Economist for six of the best, because we are living in a time when leaks are pouring out of the Cabinet to such an extent that they are flowing like Niagara Falls. This is by no means the first leak


from the Committee. There was an article in the Antiques Trade Gazette on 1st November that made it clear that someone on that paper had also seen a draft copy of the Report and knew that it said certain things about what should or should not be exempt from wealth tax.
There are several examples of the ways in which the rules are infringed, and it is hard to understand why the Committee come down hard on this breaking of the rules and punish it much more harshly than the breaking of the rules in the Scargill case. It is a curious example of double standards.

Mr. Fairbairn: In any of those cases, did any of the gentlemen concerned refuse to answer the Committee of Privileges, and thus come in contempt of the House?

Mr. Aitken: I shall come to my hon. Friend's point in a moment. The overreaction has been manifested by the exaggerated prose style of the Report. The Committee accused Mr. Knight of being" reckless "and Mr. Schreiber of being" wholly irresponsible". Those epithets are unjustified. They could only have been written in ignorance of the practices of journalists and journalism. If one examines the Report closely, one finds that it it suggested that the journalist accused of the unusual crime of reckless editing should have halted the presses of the Economist at Slough where he received the article in its final form and taken legal advice on the question whether he was in contempt of the House of Commons, or whether there were extenuating circumstances, as he thought there might have been.

Mr. Cledwyn Hughes: The hon. Member for Thanet, East (Mr. Aitken) represents the honourable profession of journalism. The Committee of Privileges has a right to call for persons and papers, and that implies that anyone who refuses to answer questions is in contempt of the House.

Mr. Aitken: I shall come to the question of the revealing of sources. I return now to the question of Mr. Schreiber. It might be said that he should have been more hypocritical, and should have written something like "It is understood that the Report will say …" rather than making it clear that he had actually seen the

Report. He would not have been in trouble. But he declined to answer certain questions on his sources and that is regarded as a contempt of the House. No doubt it is, but is it sufficiently serious to justify this penalty? That is the crucial issue. It is an honourable and traditional ethic of journalists that they do not reveal their sources. We should respect that right. The members of the Committee of Privileges are largely lawyers. I wonder whether they would have come down hard on a lawyer who had refused to reveal confidential discussions with a client. The Committee has failed to appreciate and respect the ethics of journalism in this matter. If it insists on using words like "wholly reckless" and "wholly irresponsible", it is guilty of writing a wholly exaggerated Report.
The Committee has not noted the extenuating circumstances. No damage was done, and there was confusion on the question of the time when the curtain came down and the Report became definitely confidential. The Committee has not taken sufficient note of the handsome apology by both journalists for breaking the rules.
I understand the point of view of those who say that Parliament's interests may have been damaged—though only slightly, I believe—by this affair. But Parliament's interests must be balanced against the public interest, and it can be fairly argued that the public interest was well served by this leak, even if Parliament's interests were not so well served. Since parliamentarians are ultimately public servants, we should hesitate for an eternity before taking action that shows us to be excessively jealous of our privileges at the expense of the public interest.

12.52 a.m.

The Lord President of the Council and Leader of the House of Commons (Mr. Edward Short): rose—

Mr. David Crouch: On a point of order. I thought that my bon. Friend was giving way to me.

Mr. Deputy Speaker: I do not think that the hon. Member's hopes were shared by the rest of the House.

Mr. Short: We have now debated this matter for two and three-quarter hours, and I wonder whether the House would


now be willing to come to a conclusion on it. I should be very reluctant to closure a debate of this kind, which is essentially a House of Commons matter, but I feel that all the arguments have been deployed and that every hon. Member has probably made up his mind.
I shall certainly support the recommendation of the Select Committee. This is a Committee of very senior Members, not all of them lawyers, by any means. I know of no Committee in which more trouble is taken to reach an objective conclusion, in a calm and judicial atmosphere, and in this case its decision was unanimous.

Question accordingly agreed to.

Main Question, as amended, agreed to.

Resolved,
That this House, while regretting the leakage of information from the Select Committee on a Wealth Tax and its publication by The Economist, considers that no further action need be taken in the matter.

I must make it clear, however, that I regard this as a House of Commons matter, and it is for every hon. Member to make up his own mind. I think that all the arguments have been put and I now invite the House to reach a conclusion on this matter.

Mr. Fairbairn: rose—

Mr. Deputy Speaker: Order. I think that the House would like to come to a decision.

Question put, That the amendment be made:—

The House divided: Ayes 64, Noes 55.

Division No. 18.]
AYES
[12.54 a.m.


Aitken, Jonathan
Hooson, Emlyn
Rippon, Rt Hon Geoffrey


Arnold, Tom
Hurd, Douglas
Ross, Stephen (Isle of Wight)


Bain, Mrs Margaret
Kaufman, Gerald
Sainsbury, Tim


Baker, Kenneth
Kilfedder, James
Scott, Nicholas


Bennett, Andrew (Stockport N)
Kinnock, Neil
Sedgemore, Brian


Boscawen, Hon Robert
Knox, David
Sims, Roger


Bottomley, Peter
Latham, Michael (Melton)
Skinner, Dennis


Brittan, Leon
Loyden, Eddie
Smith, Cyril (Rochdale)


Brotherton, Michael
MacGregor, John
Steel, David (Roxburgh)


Canavan, Dennis
McMillan, Tom (Glasgow C)
Stewart, Donald (Western Isles)


Carlisle, Mark
McNamara, Kevin
Thompson, George


Channon, Paul
Maxwell-Hyslop, Robin
van Straubenzee, W. R.


Cope, John
Mayhew, Patrick
Watt, Hamish


Crawford, Douglas
Mendelson, John
Welsh, Andrew


Cryer, Bob
Meyer, Sir Anthony
Wigley, Dafydd


Durant, Tony
Morris, Charles R. (Openshaw)
Wilson, Gordon (Dundee E)


Freud, Clement
Newton, Tony
Wise, Mrs Audrey


Glyn, Dr Alan
Pardoe, John
Wood, Rt Hon Richard


Gow, Ian (Eastbourne)
Parry, Robert
Young, Sir G. (Ealing, Acton)


Gower, Sir Raymond (Barry)
Penhaligon, David



Grist, Ian
Price, C. (Lewisham W)
TELLERS FOR THE AYES:


Hampson, Dr Keith
Rees, Peter (Dover &amp; Deal)
Mr. Joseph Ashton and


Henderson, Douglas
Reid, George
Mr. George Gardiner.




NOES


Archer, Peter
Fraser, Rt Hon H. (Stafford &amp; St)
Ross, Rt Hon W. (Kilmarnock)


Armstrong, Ernest
Hamilton, James (Bothwell)
Short, Rt Hon E. (Newcastle C)


Atkins, Rt Hon H. (Spelthorne)
Harper, Joseph
Silkin, Rt Hon S. C. (Dulwich)


Banks, Robert
Harrison, Walter (Wakefield)
Small, William


Beith, A. J.
Hughes, Rt Hon C. (Anglesey)
Snape, Peter


Body, Richard
Irving, Rt Hon S. (Dartford)
Spearing, Nigel


Brown, Robert C. (Newcastle W)
Lipton, Marcus
Sproat, Iain


Cocks, Michael (Bristol S)
McElhone, Frank
Stoddart, David


Cohen, Stanley
Mahon, Simon
Stott, Roger


Coleman, Donald
Mellish, Rt Hon Robert
Stradling Thomas J.


Cook, Robin F. (Edin C)
Moate, Roger
Strauss, Rt Hon G. R.


Craigen, J. M. (Maryhill)
Neave, Airey
Thorpe, Rt Hon Jeremy (N Devon)


Crouch, David
Ogden, Eric
Willey, Rt Hon Frederick


Dempsey, James
Palmer, Arthur
Wilson, William (Coventry SE)


Dormand, J. D.
Peyton, Rt Hon John
Winterton, Nicholas


du Cann, Rt Hon Edward
Rathbone, Tim



Dunn, James A.
Rawlinson, Rt Hon Sir Peter
TELLERS FOR THE NOES


English, Michael
Renton, Rt Hon Sir D. (Hunts)
Mr. George Cunningham and


Fairbairn, Nicholas
Roderick, Caerwyn
Mr. Richard Crawshaw


Ford, Ben
Rooker, J. W.

ADJOURNMENT

Motion made, and Question proposed. That this House do now adjourn.—[Mr. James Hamilton.]

SERVICE MEN'S CARS (TAXATION)

1.5 a.m.

Mr. Ian Gow: I apologise to the Minister for my failure to be here on a previous occasion for this debate.
The subject that I wish to raise tonight relates to the refund by the Ministry of Defence of VAT and car tax on cars exported from the United Kingdom, as that affects members of the Armed Forces serving in Ulster. The regulations imposed by Her Majesty's Customs and Excise under the responsibility of the Treasury and in accordance with the powers conferred upon the Commissioners by the Finance Act 1972 are as follows: in the case in which a soldier serving or about to serve in Germany, in the British Army of the Rhine, buys a car in the United Kingdom, takes it with him to Germany and remains outside the United Kingdom for a minimum period of 12 months, that car is exempt from VAT at the rate of 8 per cent. or car tax at the rate of 10 per cent.
I wish to consider carefully the wording of Her Majesty's Customs and Excise Notice No. 705 which in paragraph 1(a) reads as follows:
Anyone who intends to live outside the United Kingdom for at least 12 consecutive months may apply for permission to acquire a new motor vehicle from a United Kingdom motor manufacturer (not a dealer) or from the sole selling agent in the United Kingdom of a foreign motor manufacturer, and use it in the United Kingdom without payment of VAT, or of car tax. … (The possibility of an occasional brief visit to the United Kingdom during the 12 months may be ignored.).
Paragraph 10(a) of the same document—and this is of crucial importance—reads as follows:
A vehicle may be imported tax-free when the importer comes to live in the United Kingdom for not less than 12 months, on condition that:—

(i) he has both owned and used the vehicle outside the United Kingdom for at least 12 months (365 days); and
(ii) he will retain it for his own personal use or that of his dependants for at least 2 years."

I turn from the general to the specific. There are at present approximately 14,800 members of the Armed Forces serving in Ulster. Of that total, approximately 8,000 are serving on a four-months' emergency tour, unaccompanied by wives and

children. Of the approximately 8,000 members of the Armed Forces on emergency tour, rather less than one half but still a substantial number, amounting to nearly 3,800, have come direct from the British Army of the Rhine. In almost every case soldiers serving on an emergency four-months' tour leave their motor cars in Germany and are thus, during that period, deprived of the use of their cars.
If a soldier who has served on a four-months' tour of Ulster should bring the car that he bought in the United Kingdom back to this country within 16 months of the date of the purchase he will have to pay VAT and car tax. The soldier who has not done a tour in Ulster but has enjoyed the comparatively easier task of serving throughout his time in Germany, however, has to keep his car outside the United Kingdom for only 12 months in order to qualify for exemption from VAT and car tax.
This anomaly was first raised in the House by the present Secretary of State for Wales who, on 25th January 1973, put this question to my hon. Friend the Member for Blackpool, South (Mr. Blaker), who was then the Under-Secretary of State for Defence for the Army:
Does the Minister recall that 17 men of the Welsh Guards returned to this country from Germany on 8th December"—
that was 8th December 1972
and were obliged to pay duty on the motor cars they had purchased in Germany? Is it not a great scandal that they and 23,000 other solidiers"—
Perhaps I should explain that at that time the number of British soldiers serving in Ulster was about at its peak—
are at risk since they have the expectation that if they serve in Germany for more than 12 months they will be able to import goods tax-free? Does the hon. Gentleman agree with the letter from my constituent which says that this is tantamount to soldiers having to pay for the privilege of serving in Northern Ireland?
My hon. Friend the then Under-Secretary of State for Defence for the Army replied:
I am glad to be able to tell him that it has been agreed in principle that in exceptional cases involving tours of duty in Northern Ireland a Serviceman may be reimbursed in circumstances such as these. The detailed instructions are in course of preparation."—[Official Report, 25th January 1973; Vol 849, c. 623.]


I remind the House that that question and answer took place on 25th January 1973. Five weeks later, on 2nd March 1973, detailed instructions were issued by the Ministry of Defence setting out the circumstances in which the Ministry of Defence would reimburse both VAT and car tax for soldiers serving with the British Army of the Rhine who had been sent on emergency tour in Northern Ireland.
I quote from the Ministry's instruction dated 2nd March, of which the Minister was kind enough to send me a copy. The regulation said:
Reimbursement is tied to service in BAOR which has been interrupted by emergency service in Northern Ireland and will apply only to those who failed to qualify for relief in consequence of such service.
The regulation, as subsequently amended, went on to say that
reimbursement will be limited with effect from 1st March 1974 to those who took delivery and used their motor vehicles in BAOR on a date 16 months or more before the end of their planned tours.
I believe that two points arise. First, there is the question of the interpretation of VAT Notice No. 705 dated August 1972, from which I have already quoted, which says:
A vehicle may be imported tax-free when the importer comes to live in the United Kingdom for not less than 12 months, on condition that he has both owned and used the vehicle outside the United Kingdom for at least 12 months.
Applying just that definition, it seems to me that in a case where a soldier goes to Germany and is then sent on emergency tour to Ulster, leaving his car in Germany, where it is used by his wife or, at any rate, used entirely in Germany, the fact that the soldier has spent four months on emergency tour in Ulster ought not to ban him, even by the definition given in the document issued by Her Majesty's Customs and Excise Notice No. 705.
However, even supposing that my interpretation of the document is wrong, we then come to the conditions set out in the instructions dated 2nd March 1973 by the Ministry of Defence, as subsequently amended. Assuming that the Ministry of Defence believes that no penalty should attach to those soldiers sent from BAOR on emergency tour in Ulster, why is it

that the period for the car being outside the United Kingdom has to be extended from 12 months to 16 months in the case of soldiers who were sent to Ulster?
I have been in correspondence with the Minister, with the Secretary of State and with the Treasury about this matter. In effect, the insistence by the Ministry of Defence that it will refund VAT and car tax in the case of soldiers who have been on emergency tour in Ulster only where the car has been outside the United Kingdom for 16 months amounts to a penalty and an injustice for soldiers who are serving the Crown and their country in circumstances of great hardship and difficulty in Ulster.
Perhaps I may highlight the anomaly in this way: it seems to be most unfair that a soldier who has been serving all the time in Germany and who has had the use of his car throughout that time should be put in a better position than a soldier who has spent four months in Ulster deprived of the use of his car because he has had to leave it behind. Unless that soldier and his car remain outside the United Kingdom for 16 months, he is placed at a disadvantage as compared with the soldier who has served all the time in Germany.
The House would not want to miss any opportunity of paying tribute to our soldiers in Northern Ireland, particularly those who are there on emergency tour without their families, and those who are sent from Germany, their wives and families remaining in a foreign country, away from home. It would be an act of generosity and of justice if the Ministry of Defence were to amend these regulations.

1.19 a.m.

The Under-Secretary of State for Defence for the Army (Mr. Robert C. Brown): I am grateful to the hon. Member for Eastbourne (Mr. Gow) for raising this matter—although I should be less than frank if I did not say that I would have been more grateful if this had been a 10 o'clock Adjournment debate. I know from the hon. Gentleman's letters and questions that he is very interested in this matter. I welcome the opportunity to clarify the position and, indeed, to give some publicity to the concession that was introduced, as the hon. Gentleman said, in 1973.
Perhaps I may begin by explaining what the problem is. It is naturally very attractive to members of the Services, when they go overseas, to buy a motor car free of car tax and VAT. It is equally natural for them to want to retain this benefit when they bring the car back with them after they complete their tour of duty overseas. Understandably, they like to bring home as new a vehicle as the rules will allow. This, in turn, leads them to put off taking delivery as late as possible.
The rules, which are applied by Her Majesty's Customs and Excise and not by the Ministry of Defence, are common to civilians and Service men alike. The rules are that unless the car has been in the possession of the owner and used by him or her overseas for a period of not less than 12 months, car tax and VAT are payable when the car is brought back to this country. In other words, the right to buy a car free of VAT and car tax is a special benefit, and in order to qualify for it certain rules must be fulfilled—rules, which are not really so very demanding.
Most members of the Services are very good at arranging their affairs so that they satisfy the requirement, and for those who think that their calculation may be upset by some unforeseen contingency, such as a premature posting, there are very good insurance arrangements obtainable through the NAAFI and elsewhere. There has been no occasion, even if such a measure could be justified on wider grounds, for making special provision for the majority of members of the forces serving abroad.
There are exceptions to every rule, however, and the emergency in Northern Ireland proved to be one of them. It was found at the end of 1972 that people who had bought cars in the reasonable expectation of not less than 12 months' residual service in Germany were having their assumptions disturbed by an unexpected emergency tour—usually of four months—in Northern Ireland. The upshot was that even though they had done their best to meet the condition by taking delivery of their car not less than a year before the completion of their normal tour, they had to pay up. To assist these people, who were unable to foresee the problem that would arise, a special concession was introduced in 1973 by any predecessor, the

hon. Member for Blackpool, South (Mr. Blaker)
The original concession had no strings attached. If failure to complete the 12 months was a direct result of an emergency tour in Ulster, the individual was reimbursed what he had had to pay to Customs. However, as the hon. Gentleman has pointed out, the very full instruction sent out in March 1973 embodied a modification to be introduced one year later, in March 1974. This limited the reimbursement to those who took delivery of their motor vehicle 16 months or more before the end of their planned tours. The hon. Gentleman has argued very eloquently that this modification is unfair.
I can see that to a person like the hon. Gentleman's constituent, if it is necessary to pay £14920 to bring one's car into the country, the system can seem a little unfair. It may seem more unfair if a person has had a car for more than a years and falls short of the 16-months' rule by only about a month.
However, there is another point of view. As far as Her Majesty's Customs and Excise are concerned, the rule that a car, or anything else, must have been owned and used for a year to qualify for relief is absolute. Although this is not a point for me to discuss in detail, I am sure the hon. Gentleman will agree that it is also necessary to prevent abuse of the system. What we have done by agreeing to reimburse individuals in certain circumstances is to eliminate the risk that, for a particular kind of reason over which they have no control, they will fail to qualify. From the outset, the provision was deliberately and necessarily confined to emergency tours in Northern Ireland. By introduction of the 16– months' rule we have not gone back in principle on what was agreed originally. We have merely asked those who think they could be affected to buy their cars a little earlier—four months earlier, in fact, the length of a normal emergency tour in Northern Ireland.
We gave a whole year's notice of our intention to do this and I do not think that it was in any way an unreasonable thing for us to ask people to do. Any member of the Armed Forces knows that he is likely to move at short notice, and for the Army this applies particularly to service in Northern Ireland. The Service man knows, also, that he may be sent on


an exercise, or may even come back to Britain on leave. All these things should be taken into account, and I believe we have given people sufficient notice for them to plan ahead.
The 12-months' rule was necessary to deal with a situation which those affected did not foresee and could not have been expected to foresee. That situation no longer obtains. Emergency tours in Northern Ireland have, unfortunately, become a feature of life for many of those serving in Germany. To revert to a 12-months' rule would go beyond the original intention of protecting those who, despite prudent management, had to pay. It could involve heavy cost, with no compensating benefit, and I am afraid that I could not agree to it. I do not think it is asking a great deal of the individual to order his car a little earlier than would otherwise have been the case, in order to reduce the likely cost, to the taxpayer, of reimbursement. This is a privilege and there are many people who would be happy to bring back a 16-months-old car rather than a 12-months-old vehicle without having to pay car tax or VAT.
I am sorry that the hon. Member feels that we have done insufficient to make the arrangements known. However, to ensure that the regulations are known to all concerned, a letter has recently been issued asking commands and districts to draw the attention of all personnel liable to serve on emergency tours in Northern Ireland, whilst serving overseas, to the instructions already issued. It is my general experience that unit commanding officers, knowing their responsibilities, take particular care to ensure that such concessions are well known to those under their command without the need to

repeat a fairly lengthy and detailed piece of promulgation.
The hon. Gentleman referred in correspondence to one commanding officer who claims that these instructions are not widely known. It has always been my understanding that it is the duty of the commanding officer to ensure that the men under his command are aware of instructions issued by my Department. Indeed, if a commanding officer claims that any instruction issued by my Department is not known among his men, he must question how he performs his duties.
I also think that the fact that this debate has taken place will provide some valuable publicity. As the hon. Member knows, my right hon. Friend the Financial Secretary to the Treasury has arranged for Customs officers to advise those who have to pay tax at the ports to apply to the Ministry of Defence if there is any reason to think that they can obtain a refund.
Finally, I think we might put this problem in its context by quoting a few figures, since the hon Member was quoting figures. There are 15,000 men serving in Northern Ireland, of whom about 8,000 are on emergency tour. Of these, 3,800 come from British Army of the Rhine. Therefore, in total, 3,800 men out of an Army of 175,000 are involved at any one time—about two in every 100. Out of these 3,800 men, the hon. Member found only one complainant. That does not suggest to me either that our instructions are not known or that there is any general dissatisfaction with our arrangements.

Question put and agreed to.

Adjourned acordingly at twenty-nine minutes past One o'clock.